Corruption and Rent-Seeking

The rent-seeking theory was one of thefirst economic instruments developed tomodel corruption in the public sector.Comparing corruption with lobbying, itproposes that the former is the lesser oftwo evils, since lobbying entails the wastage of resources inthe competition forpreferential treatment. This study showsthat the traditional rent-seeking theorymisunderstands three factors: first, theimpact of a corrupt monopoly on the rent'ssize; second, corruption as a motivationfor supplying preferential treatment andthird; that corruption involves a narrowerrange of interests than those ofcompetitive lobbying. Taking these factorsinto consideration, the opposite argumentis valid: corruption has worse welfareimplications than alternative rent-seekingactivities.

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