Question

What is rent seeking? Give two examples.

Answer 1

Rent seeking is the way by which a company or an individual uses their economic status, position or resources to gain additional monetary gain, without giving any benefit to the society. This practice of rent seeking is detrimental to the society and hampers innovation in the society. It decreases the overall revenue to the government, competition in the market etc.

The most common example of rent seeking is lobbying by the corporate group for subsidy or any other kind of gain.

The another example is taxi licensing till the time it limits the taxi supply in the market.