Edited by Roger D. Congleton and Arye L. Hillman
This chapter views the theory of rent seeking in the context of governmental regulation of prices and conditions of market entry. Such policies create economic rents for the regulated firms and put in place incentives for rent seeking through use of real resources to contest and gain access to the rents. Evidence from the history of economic regulation and deregulation in the United States is marshaled to show that regulatory intervention does not add to society’s wealth, but, consistent with the logic of collective action, instead redistributes existing wealth from unorganized, politically weak groups (‘the many’) to well-organized, politically effective groups (‘the few’).
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