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Rent Seeking, Market Structure and Growth
Scandinavian Journal of Economics (2013)
  • Daniel Brou, University of Western Ontario
  • Michele Ruta

We study the role of productive and unproductive entrepreneurship in economic growth, in a setting where firms compete in both economic and political markets. Specifically, firms compete for market share through cost-reducing technological innovation, and they vie for influence over government transfer policy through rent-seeking activities. We find that rent-seeking affects growth in two ways: it allows firms to ignore economic competition, leading to less innovation, and it alters the number of firms that are supported in equilibrium. The former effect is negative, while the latter is ambiguous. We show how these effects depend on various characteristics of economic and political markets.

  • Rent Seeking,
  • Market Structure,
  • R&D Investment,
  • Growth,
  • Welfare
Publication Date
July, 2013
Citation Information
Daniel Brou and Michele Ruta. "Rent Seeking, Market Structure and Growth" Scandinavian Journal of Economics Vol. 115 Iss. 3 (2013)
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