Legislation and Rent Seeking
Tullock’s concept of rent seeking helps explain government action as a form of self-interested behavior by politicians and voters. Many actions of people in government can be explained by this analysis. In fact, it might be argued that an industry of rent seekers exists in most state capitals, and most certainly in Washington, D.C. There are at least two broad applications of this rent-seeking theory to government actions. The first explains the types of government regulation. George Stigler (1971) described the benefits and costs to various interest groups of using the government as a vehicle to increase their own wealth. Some groups, such as agricultural interests, seek income transfers from the state. Other groups, such as Airbnb, use politics to fend off regulation that would regularly apply to all lodging accommodations but would have a negative impact on Airbnb’s costs and profit. In some cases, management and labor join together to use the state for their mutual benefit at a cost to consumers, such as in attempts to restrict imports like steel.
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