When is Rent-Seeking Wasteful?: A Critique of the Theory of Rent-Seeking

The paper examines the theory of rent-seeking (TRS) with an emphasis on the implications of different institutional settings for the efficiency consequences of rent-seeking, using Korea and Japan as examples. The first section summarizes the standard TRS argument. In the second section, some conceptual problems of TRS are discussed. The third section questions the validity of "competitive rent-seeking" models and discusses problems of collective action and of strategic behavior. The last section extends our discussion and deals with problems of unequal distribution of rent-seeking opportunities and, more importantly, of "dynamic" benefits of rent.