The Dynamic Rent-Seeking Theory: A Response to Critics
19 Pages Posted: 26 Oct 2011 Last revised: 29 Jan 2014
Date Written: September 25, 2011
Why is rent-seeking highly relevant for recent economic theory? In this paper, I argue that the common criticism of rent seeking theory is not new and relevant. First, I explain the basis of rent seeking and the main contributions to this theory including the theory of bureaucracy. Then, I explain the criticism of this approach, which attacks the static grounds of this theory stemming from the perfect competition equilibrium model and the normative concretizing of rent-seeking actions. I argue that the rent-seeking theory had already abandoned the static perfect competition model in the 1980s and that arguments using dynamic rent-seeking theory remain normative until they explain the institutional causes of economic development, which has been the centre of the economic profession for centuries.
Keywords: Bureaucracy, economic development, economic growth, entrepreneurial market process, profit-seeking, rent-seeking
JEL Classification: B25, D42, O43
Suggested Citation: Suggested Citation