Abstract
We study the effects of rent-seeking on economic growth. The starting point is an overlapping generations model where growth is driven by human capital accumulation. In this setting we introduce a source of rent, namely monopolization of one of the sectors of the economy, and agents who are heterogeneous in their (intrinsically useless) rent-seeking ability. Agents can boost their income either by investing in human capital or by capturing a fraction of rent. Monopolization increases the growth rate. The effect of rent-seeking on growth is ambiguous, but it increases wealth inequality.
| Original language | English |
|---|---|
| Pages (from-to) | 475-518 |
| Number of pages | 44 |
| Journal | De Economist |
| Volume | 173 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Sept-2025 |
Keywords
- Capital accumulation
- Economic growth
- Monopolization
- Rent seeking
- Wasteful competition