Rent-seeking Research Articles

Farming the sun: the political economy of agrivoltaics in the European Union

AbstractWhat kind of agricultural practices do agrivoltaic systems incentivise? Under what circumstances can they deliver the promised benefits, and who is likely to bear the costs? Presented as a win–win solution for developing solar energy while enhancing farmland productivity, agrivoltaics offer several advantages—including decentralised electrification, improved crop yield, and thus increased farmers’ income. Compared to traditional utility-scale solar, however, agrivoltaics generally entail higher installation costs and material requirements, lower energy generation, and thus increased cost of electricity production. Drawing on William Kapp’s theory of social costs and ecological political economy, this article examines agrivoltaics developments within the latest EU-level policy initiatives on energy, agriculture, and climate change. Despite room for optimism regarding the comparative advantages of agrivoltaics, the findings reconcile these benefits with multiple trade-offs inherent in alleged ‘win–win’ solutions. Addressing the dual objectives of energy and agricultural transitions, the uncritical deployment of agrivoltaics risks perpetuating the prevailing ‘cheaper food paradigm’, characterised by capital and energy-intensive agricultural techniques, trade globalisation, wage compression, and the displacement and/or deferral of environmental harm. Additionally, rent-seeking behaviour among landowners leasing to energy developers could inflate agricultural land prices, thus exacerbating land ownership intensification and the financialisation of European farmland. This article concludes by advancing a few avenues to reinvest the rental income of agrivoltaics to facilitate the transition to agroecological farming practices.

Rent seeking in a constitutional context: linkages and constraints

Rent seeking in a constitutional context: linkages and constraints

“Where you stand depends on where you sit”: The politics of petroleum pricing in Ghana's election cycle

AbstractThis study examines how fuel pricing in Ghana has been used as a political tool to win votes and the government's role in this process. Applying Mile's Law, it explores post‐truth theory through content analysis of secondary data and interviews with energy experts. The findings indicate that political parties gain significant political leverage by promising lower fuel prices during campaigns but fail to deliver once in office. The government's influence on fuel pricing is minimal, largely due to factors beyond its control. To stabilize fuel prices, the study recommends improving fiscal and economic performance to combat currency instability and educating the public on the factors influencing fuel pricing to prevent misinformation.Related ArticlesAsiegbu, Martin F., Okey Marcellus Ikeanyibe, Pius Otu Abang, Okwudili Chukwuma Nwosu, and Chuka Eugene Ugwu. 2024. “Natural Resource Fund Governance and the Institutionalization of Rent Seeking in Nigeria's Oil Sector.” Politics & Policy 52(1): 169–95. https://doi.org/10.1111/polp.12579.Ayanoore, Ishmael, and Sam Hickey. 2022. “Reframing the Politics of Natural Resource Governance in Africa: Insights from the Local Content Legislation Process in Ghana.” Politics & Policy 50(1): 119–36. https://doi.org/10.1111/polp.12449.Kuyini Mohammed, Abdulai. 2013. “Civic Engagement in Public Policy Making: Fad or Reality in Ghana?” Politics & Policy 41(1): 117–52. https://doi.org/10.1111/polp.12003.

Does the new government-business relations improve corporate environmental performance? A perspective based on environmental regulatory capture

IntroductionGovernment-business relations are a concentrated manifestation of the interaction process and outcomes between the government and enterprises, directly influencing the social capital and institutional environment upon which businesses rely. Sound government-business relations are crucial for addressing environmental issues and promoting high-quality development in China.MethodsThis study extensively examines how New Government-business Relations (NGR) impact Corporate Environmental Performance (CEP) by analyzing A-share listed companies from 2017 to 2021 and applying the regulatory capture theory.ResultsThe empirical findings show that NGR can prevent environmental regulatory capture, thereby improving CEP. After conducting several robustness tests, such as substituting the dependent variable, using instrumental variables, and performing dynamic panel analysis, the results remain consistent. Additionally, the mechanism analysis reveals that NGR can effectively thwart environmental regulatory capture resulting from rent-seeking behavior and political connections, leading to enhanced CEP. Moreover, additional research indicates that the beneficial impact of the NGR on the environmental performance of non-high-pollution industry enterprises, mature enterprises, and businesses operating in regions with stringent environmental regulations is more significant.DiscussionBuilding on prior literature, this paper augments the body of relevant research on environmental regulatory capture within the Chinese context, offering fresh insights and empirical evidence to comprehend the evolving government-business relations in contemporary times and their significance in environmental conservation.

Constructing climate change rentierism in Jordan

ABSTRACT Jordan is exceptionally vulnerable to climate change and has limited adaptive capacities. It is also a non-democratic state with an ubiquitous role for the monarchy that results in narratives that seek to promote the regime’s stability by securing external support in the form of ‘rents’. In this paper we examine how the government ‘rents out’ Jordan’s stability and its engagement with climate change initiatives to the international community through its unintentional use of fearmongering. Jordan’s vulnerability narrative, in particular, highlights its stabilising role in regional affairs (e.g. by hosting refugees from neighbouring countries) and attracts the support of external actors interested in its stability. While rent-seeking behaviour could serve as a short-term solution to the imminent threats imposed by climate change, it can also reinforce authoritarianism and divert attention away from long-term sustainable adaptation and mitigation activities.

Developing electric vehicles in China and the United States: Revisiting debates on industrial strategy

AbstractMotivationStrategies to develop manufacturing industry are the subject of lively debate over whether to follow or defy national comparative advantage. Electric vehicles (EVs), a major change for automobile manufacturers, are no exception.Despite the US government's promotion of global integration to activate the semi‐invisible hand of market forces, neither traditional Detroit automakers nor new firms, even with government grants or loans, were able to launch EVs on the world market promptly, with the notable exception of Tesla. In China, the government helped dozens of domestic electric vehicle manufacturers enter the market through formidable government subsidies. However, none of China's manufacturers, other than Wuling, were able to surpass Tesla in sales in China.The rapid growth of Tesla and Wuling without relying heavily on government protection and subsidies raises the question of whether their success can be attributed to other forms of state intervention.PurposeWhat policies and strategies enable manufacturers to develop and market a new technology, such as EVs? What can we learn by comparing the experiences of US and Chinese vehicle manufacturers?We consider these questions and what the implications are for debates about industrial development strategy.Methods and approachWe compare four carmaking firms—GM, Tesla, BYD, and Wuling—their business strategies and their interactions with the US and Chinese states. We draw on company reports, government documents, and press reports.FindingsBoth China and the US employed semi‐developmentalist, semi‐neoliberal policies to promote the manufacture of EVs. The US subsidized research and development in its automobile industry and provided incentives to consumers. It has subsequently moved to lending to the most promising firms for EV production. China, in contrast, has selectively subsidized EV firms all the way from development to marketing.Subsidies from the US government have been steady: they are expected to stay this way in the near term. However, the fastest‐growing carmakers have used outward foreign direct investment to gain competitive advantage. China's subsidies, on the other hand, have been unstable: linked to the performance of the target firms. The higher the firm's profit, the lower the subsidies and vice versa. China has been careful with subsidies to prevent rent seeking and moral hazard.Neither following nor defying comparative advantage explains the strategies followed by the four firms: comparative advantage considerations have been tempered by the possibilities of foreign investment.Policy implicationsThe results imply that traditional developmental strategies have resorted to inward foreign direct investment in high‐income countries as a means to learn technologies and outward foreign direct investment in low‐ and medium‐income countries as a way to reduce production costs, but have missed the comparative advantage of outward and inward foreign direct investment, and strategic mixes of these, when developing and diffusing radical innovation like EVs.

Foundations of market power in monetary economies

We study the foundations of firms' market power in a continuous-time model where agents are price-makers who interact explicitly with each other. Market power arises from the existence of rents, the size of which depends on consumers' outside options, and firms' ability to appropriate these rents through rent seeking. We study how measures of market power (e.g., markups, concentration) are affected by search frictions, monetary policy, and self-fulfilling beliefs. An increase in the nominal interest rate affects market power by changing consumers' payment capacity and the value of their outside options, and by altering firms' rent-seeking behavior.

Land Stewardship and Development Behaviors Under an Ecological-Impact-Weighted Land Value Tax Scheme: A Proof-of-Concept Agent-Based Model

Sprawling land development patterns have exacerbated ecological degradation, social fragmentation, and public health problems. Perverse incentives arise from the ability to privatize collectively created value in land rents and socialize ecological costs. Land value taxation (LVT) has been shown to encourage urban infill development by reducing or eliminating rent-seeking behavior in land markets. However, despite its purported benefits, this tax reform is value monistic in its definition of optimal land use and, therefore, does little to address the lack of non-market information to inform land use decisions. We propose an ecological-impact-weighted land value taxation policy (ELVT) which incorporates the ecological footprint of land use into one’s land value tax burden. We test both proposed policies (LVT and ELVT) relative to a “status quo” (SQ) property tax scheme, utilizing a conceptual spatially explicit agent-based model of land use behaviors and housing development. Our findings suggest that both tax interventions can increase the capital intensity and decrease the land intensity of housing development. Furthermore, both tax interventions can lead to a net profit loss for speculators and a decrease in the average housing unit price. The ELVT scheme is shown to significantly increase urban nature provisions and dampen the loss of ecological value across a region.

Perceived corruption, economic freedom, and firms in India

Abstract Research has shown that the relationship between economic freedom and corruption is rather complex. While some studies suggest a negative relationship, others show the matter to be more nuanced. While more regulations are known to foster corrupt institutions, a competitive market can also incentivize bribery and corruption. Our study examines the role of economic freedom as it relates to perceived corruption, measured via a survey for India. Using firm-level data, we explore the relationship between perceived corruption in the formal sector and economic freedom across Indian states. In our baseline results for Indian firms, we find a significantly negative relationship between perceived corruption and lagged economic freedom. These results hold when we design matching models and include a number of potentially confounding factors to control for identification issues. Additionally, we show that small and young firms and those with sole ownership perceive greater benefits from higher economic freedom. In contrast, older firms perceive higher corruption when economic freedom is higher. This lends support to the idea that competition facilitated by economic freedom can increase rent seeking behavior. Our study contributes to the literature by emphasizing that the relationship between economic freedom and corruption in India is layered, with firm characteristics playing a crucial role.

Researching into Preventing Harmful Rent-Seeking Practices: Strategic Policy Interventions Required and Lessons Learnt for Asian Countries

The author of this work argues that rent-seeking occurs in a situation wherein a company or individual seeks special privileges from another party, often the government, but does not reciprocate back. Its examples are (a) license requirements for professions; (b) creating barriers to entry for new businesses, and (c) grants, subsidies, or tariff protection. In the language of economics, rent is defined as “wealth gained via questionable, often manipulative means”.A closer look at the theoretical perspective and review of related literature is indicative of the fact that identification (and practice) of policy-induced harmful rents have been resorted to in many firms and for various purposes. More specifically, the practice of rent-seeking model has been found to be resulting in both economic ‘gains’, and ‘losses’. The bottom-line is that there is a lack of scientific research evidence and published data on how national governments and donor agencies (from across the regions of the globe) have formulated and adopted rent-seeking approaches. The author of this research essay argues that in view of these contradictions and controversies, it is important for the academic and research community to seek answers to pertinent questions on potential advantages of rent-seeking approach. The questions that need to be debated and researched into are:a) what are the approaches to identify policy-induced harmful rent-seeking practices? b) what are their respective strengths and weaknesses? c) how governments and donors have used them in different perspectives? The author, in this paper, aims to seek answer to the above prominent and key questions in the context of countries in the Asian region. In terms of research methodology, secondary data (that are largely ‘quantitative’ in nature) have been used and method of data analysis is descriptive (involving “desk-based research” approach). Data sources have been quoted in the text (including under references). The paper briefly concludes that the rent-seeking activity might be negative, but it might preserve a “growth-enhancing rent”. Even if the rent-seeking activity has a positive value, the “outcome-rent” might be negative. Governments, thus, need to be more transparent in adopting rent-seeking practices; people know how laws and regulations are produced. This renewed critical and multidisciplinary approach has important policy implications for the debates over institutional reform in rent-seeking practices for economies in Asia and the Pacific.In conclusion, the author says that the analysis of rents and rent-seeking practices has been primarily dominated by an economic point of view. This perspective places emphasis on assessing rents in accordance with their impact on “efficiency and economic growth”. As against political approach to rent-seeking (which assumes the negative impact of rents and their potential to derive from corrupt activities), monetary policy experts and economists classify rents as “growth-retarding” (or “growth-enhancing”).In terms of implications of harmful rent-seeking practices for monetary policy, the author of this work argues that the rent-seeking framework has to be extended by incorporating policy insights and strategies developed by stakeholders in the governmental sector and institutional economists if it is to explain the anomalous role played by rent-seeking in Asian countries. This mechanism includes detailed analysis of economy in the broader context in countries such as Thailand, Malaysia, the Philippines, and Indonesia (including the Indian sub-continent).

Institutional and Regulatory Compliance Gaps in Natural Resource Governance: Empirical Evidence and Lessons from the Nigeria Oil and Gas Industry

Institutional governance has traditionally been frequently undermined by developing countries, but this behaviour has immensely impacted economic growth and development outcome with long term implications. More fundamentally, the Nigeria oil and gas industry governance are beset with various challenges including regulatory compliance, monitoring capacity, enforcement mechanism, politics and very frequently plagued with blame games. Consequently, the study conducted primary and secondary data to problematized gaps in institutional governance from the standpoint of development discourse to establish a convergence of evidences within the context of the quality of state institutions that unarguably reflects the Nigeria scenario. Institutional and regulatory compliance gaps permeate the gamut of the oil and gas industry so resolutely in the global South like Nigeria, orchestrated by the political elites who are so perverse, rent seeking, inept and greed driven with no clear sense of patriotism compare to the global North like Norway that is more effective and nationalistic. The findings of the study highlight weaknesses in policy framework, corrupt practices, poor contract management, compromised professional integrity, inadequate funding, poor contract management and systemic gap in revenue management as a consequence of gaps in natural resources governance in the oil and gas industry in Nigeria. It explains this on the basis of existing mechanisms and empirical evidences. These evidently exemplify that Nigeria has struggled for several decades from lethargic institutional and regulatory compliance capacity as the presence of oil and gas does not translate or appear to systematically support development outcome in many developing countries.

Methods to Stimulate the Proactivity of Enterprises in Fulfilling Safety Responsibilities: A Fundamental Issue in Construction Safety Management

Management factors are among the most significant causes of construction safety incidents, and there is an issue of insufficient supervision at present. The degree of diligence exhibited by relevant entities is crucial, and the payoff can influence the decision-making behaviors of involved parties. Based on this, the aim of this paper is to investigate how to enhance the initiative of enterprises in fulfilling their safety responsibilities during the construction process. By developing a tripartite evolutionary game model that involves supervision companies, general contractors, and labor subcontractors and conducting numerical simulation analysis, we reveal that simultaneous proactive investment in safety by all three parties is challenging, with labor subcontractors being relatively more prone to opt for active safety investment. Supervision companies and general contractors often struggle to fulfill their safety duties at the same time. Factors such as the rewards and penalties stipulated in a contract, rent-seeking amounts, and accident-related losses have a significant impact on the evolution of the system. Based on the findings, we propose recommendations for construction management, which include the management of labor subcontracting in construction, the control of rent-seeking behaviors, and the establishment of a cooperative safety culture during the construction process.

공공재적 상(prizes)을 갖는 Tullock 집단 경합 모형에 대한 소고

The rent-seeking contest theory of Tullock has been deriving a lot of studies on competitions between individuals and/or groups in various settings. Among them, we reviews several works that examine Tullock group contests with group-specific public-good prizes in order to enhance our understanding about the effect of the degree of substitution or complementarity between members in a group on their effort incentives for their group’s winning. We also reviews studies on the optimal degree of substitution (complementarity) that maximizes the objective function of a contest organizer and group members’ payoffs, respectively, and endogenous formation of groups in Tullock contest setting as well. This paper may provide helpful knowledge and information that can be referred to design solutions for alleviating wasteful resources spent on rent-seeking behavior in our society.

Understanding Decision Makings of Public Agents: A Model of Conscience Market

The overall efficiency or optimality of a society is the sum of all individual agent’s efficient decision makings. Among them, the decision makings of public agent like elected officials, bureaucrats, and other government agents are critically important. They, however, can be influenced by their own perceived self-interest when making decisions in their official roles. Even in modern society equipped with well-established rule of law, it is not unusual to see that public agents commit decision makings outside of common sense, which looks conscienceless or corrupt. Those decision makings may hurt the economic and political status of a society, and social welfare. In this context, it may be useful to understand why and how the public agents make conscienceless or corrupt decision makings. For this purpose, this paper builds a model of conscience market which is based on the saying “Do not sell your conscience for money”. In the model, there are supply of and demand for conscience, the price of which is determined in the market. The supply of and demand for conscience is derived from the optimizing behavior. On the one hand, selling the conscience means that he (or she) gives up being conscientious for monetary reward, which is derived from utility maximization. On the other hand, an individual who buys some amount of conscience from other party can get a privilege unfairly favorable to himself (or herself), which is used for rent seeking. That is, the demand for conscience is derived from the optimization of rent-seeking. This paper identifies three key determinants for being conscientious, which are detection probability, discounting factor and income. It is also shown that the effects of those determinants on price and quantity of conscience depend on the market structure.

Tripartite evolutionary game analysis of government reward and punishment mechanisms and agricultural resilience under a dual carbon context

PurposeUnder the “dual carbon” framework, the article explores the equilibrium points among the government, agricultural enterprises and village committees, and uses sensitivity analysis to reveal the dynamic factors affecting these stakeholders, thereby proposing methods to enhance agricultural disaster resilience.Design/methodology/approachThe article uses MATLAB to construct a game model for the three parties with interests: agribusiness, government and village council. It examines the stability of strategies among these entities. Through graphical simulation, the paper analyzes the sensitivity of agricultural enterprises carbon emissions and village committees’ rent-seeking behaviors in the decision-making process, focusing on significant factors such as government carbon tax and regulatory policies.FindingsA single government reward and punishment mechanism is insufficient to influence the strategic choices of enterprises and village committees. The cost of rent-seeking does not affect the strategic choices of enterprises and village committees. A key factor influencing whether the village committee engages in rent-seeking is the level of labor income of the village committee as an “intermediary”.Originality/valueThis paper focuses on the dynamic game between three stakeholders (the government, agricultural enterprises and village committees), seeking dynamic equilibrium and conducting sensitivity analysis through visualization to provide the government with optimal policy recommendations.

Politico-economic determinants of the performance of electric cooperatives in the Philippines

In rural areas in the Philippines, ensuring access to affordable, reliable, and sustainable electricity falls mainly to electric cooperatives (ECs). While this electrification model proved successful in the United States, developing countries with weak political competition and institutions may allow rent-seeking behavior in the sector. This paper examines the politico-economic determinants of EC performance in the Philippines and finds that lower political competition within an EC franchise area is associated with poor collection efficiency and larger employee size. The study points to the need for greater regulatory scrutiny among EC franchise areas with weak political competition. It also provides insights on facilitating progress towards attaining sustainable development goals and energy transition in developing countries with similar institutional endowments.

Rent Seeking in Evolution: Types, Actors, and Results

Rent Seeking in Evolution: Types, Actors, and Results

The role of governance and infrastructure in moderating the effect of resource rents on economic growth

AbstractThis study investigates how governance and infrastructure moderate the effect of natural resource rents on economic growth using a sample of 110 countries from 2000 to 2018. The empirical evidence is based on panel smooth transition regressions (PSTR). The nexus between economic growth and natural resources is not linear and the underlying non‐linearity is contingent on existing infrastructural and governance levels. Evidence of a “natural resource curse” is apparent in countries with extremely low levels of governance and infrastructural development. The favorable effect of natural resources on economic growth requires a governance threshold of −1.210 and an infrastructure threshold of 2.583, indicating that countries with governance and infrastructure levels higher than these values tend to benefit much more from the wealth of natural resources. Countries identified below the established thresholds are mainly from Africa. Policy implications are discussed with specific emphasis on African countries.Related ArticlesAli, Hamid E., and Shahjahan Bhuiyan. 2022. “Governance, Natural Resources Rent, and Infrastructure Development: Evidence from the Middle East and North Africa.” Politics & Policy 50(2): 408–40. https://doi.org/10.1111/polp.12451.Asiegbu, Martin F., Okey Marcellus Ikeanyibe, Pius Otu Abang, Okwudili Chukwuma Nwosu, and Chuka Eugene Ugwu. 2024. “Natural Resource Fund Governance and the Institutionalization of Rent Seeking in Nigeria's Oil Sector.” Politics & Policy 52(1): 169–95. https://doi.org/10.1111/polp.12579.Ikeanyibe, Okechukwu M. 2018. “Bureaucratic Politics and the Implementation of Liberalization Reforms in Nigeria: A Study of the Unbundling and Reorganization of the Nigerian National Petroleum Corporation.” Politics & Policy 46(2): 263–94. https://doi.org/10.1111/polp.12249.

Digital transformation driving green innovation: Evidence from Chinese A-Share firms

With its “dual carbon” goals, Chinese firms are being challenged to improve both their environmental and economic performance. Previous research has found that digital transformation can foster the development of firms in various ways. Using a fixed-effects Poisson model, we examine China's A-share listed firms from 2009 to 2022 to elucidate the relationship between digital transformations and green innovation. The results show that digital transformation significantly promotes firms' green transformations. Moreover, digital transformation affects green innovations by attracting media attention, increasing analyst coverage, and reducing firms' rent-seeking behavior. The study further demonstrates that institutional investors and comprehensive green information disclosure can augment digital transformations' positive effects on green innovation.

The Political Economy of Rent-Seeking Behavior and the Connection with Unearned Income and Inequality

For decades, inequality has been one of the most important problems to be tackled, and studies of income (or wealth) inequality are the source of much research. When we deal with the sources of unequal income distribution, and if a factor is unproductive but only reasonable in the accumulation of wealth, it has a diverting impact on income. In this line, rent-seeking activities are a structure suitable for this content. Rent-seeking is aimed at gaining without contributing to the number of goods and services and shows the characteristic of unearned income. Earned income is paid for the labor from physical and mental activities. Unearned income does not have this feature and is a return on income due to investment in income. According to Stiglitz (2016), rent-seeking is a struggle to get a larger share of wealth. Taking larger shares is linked to declining shares and leads to inequality within society. In the context of the political economy of rent-seeking behavior, we examine various approaches. In addition, we illustrate how rent-seeking is related to unearned income and inequality.