Rent seeking

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Definition

Rent seeking is defined as the expenditure of economic resources by economic actors in order to increase their economic share of a transaction, without increasing the overall economic welfare. Rent seeking is thus bad for the economy as a whole.

Types of rent seeking

  • Corporations and interest groups lobbying the government often ends up being rent seeking.
  • Non-price competition is a form of rent seeking where buyers expend resources while competing to buy a scarce commodity.
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