CESifo DICE Report 3/2015
DICE Forum: Rent-Seeking
Rent-seeking behaviour is one of the erosive forces of political systems and results in reduced economic efficiency. It is therefore important to analyse the incentives people have to engage in rent-seeking behaviour in order to improve our institutional frameworks. In the CESifo DICE Report 3/2015 experts analyse different forms of rent-seeking behaviour and their consequences for institutional systems.
Sanjay Patnaik, George Washington University, gives an overview of rent-seeking and public policy. Mark A. Zupan, University of Rochester, looks at rent-seeking on the supply side of politics. He argues that political capture by government insiders is the potentially more dangerous form of rent seeking compared to the classic theory, since government insiders have the motive, means and opportunity to co-opt the political machinery to promote their own interests. Thomas Groll, Columbia University, and Maggie McKinley, Harvard Law School, model the lobbying industry as a relationship market. They analyse the incentives of policy makers and lobbyists in that setting and compare them to the classical lobbying model, where lobbying consists of only one single transaction.
Panu Poutvaara, Ifo Institute, looks at the role of political parties and argues that parties can act as gatekeepers and reduce rent-seeking. Paul Dragos Aligica, George Mason University, and Vlad Tarko, Dickinson College, describe crony capitalism as a second-best solution to weak institutions and the road to cronyism. Kjetil Bjorvatn, NHH Norvegian School of Economics, and Mohammed Reza Farzanegan, Philipps-Universität Marburg, analyse the relationship between natural-resource rents and political stability in the Middle East and North Africa to test whether rents can buy stability. Thomas Moutos and Lambros Pechlivanos, both Athens University of Economics and Business, use Greece as an example to examine rent-seeking during periods of austerity. And Charles B. Blankart and David C. Ehmke, both Humboldt-Universität Berlin, focus on rent-seeking in regional policy.