Rent Seeking from a Property Rights Perspective

Abstract

James Buchanan [15, 15] has suggested that analysis can readily be incorporated within the property rights approach; and, as with public choice, the theory of rent seeking can be interpreted as an appropriate extension. Yet, no one has really explored rent seeking (or revenue, premium, tariff or directly unproductive profit seeking) from a property rights perspective.' Buchanan [14; 15; 16; 17] clearly indicated that property rights assignments actually underlie the rent-seeking process, and others have also recognized this [4; 20; 23; 28], but there are further insights into the workings of the political economy which can be derived. For instance, lobbying activities with nonpecuniary goals clearly fit into the rent-seeking framework when viewed through the property rights paradigm. This contrasts strikingly with the perception of rent seeking held by some writers [9; 10; 11; 12; 13]. Furthermore, a property rights approach to rent seeking provides predictions of a spiraling process of government growth since successful rent seeking by one interest group generally requires expansion of bureaucratic powers, while at the same time creating incentives for the formation of additional rent-seeking interest groups. Legislative responses to these new groups requires further expansion of the bureaucracy and creates incentives for more rent seeking, so the growth process continues. In this paper, a brief summary of the conclusions of the rent-seeking literature will be presented followed by an explanation of how the same conclusions have been deduced using the property rights paradigm. Various extensions of the rent-seeking concept such as those alluded to above are then obtained by emphasizing a property rights approach. Following this, the terms used to describe rent seeking (e.g., directly unproductive profit seeking, etc.) will be discussed to determine which, if any, is the most appropriate characterization of the phenomenon.