Rent-Seeking+Behavior

Rent seeking behavior is any activity designed to transfer income or wealth to a particular firm or resource supplier at someone else's (including society's) expense. Because monopolies can usually make an economic profit, they will go to great lengths in order to become a monopoly or else keep their status as one through the government, either by legislation or some type of license. However, going to these lengths adds more to their costs, and will do nothing to increase their output, meaning their actual costs and efficiency differ from what most graphs depict. Also, there is usually a moral code dispute with this practice, as many people often associate this behavior with government corruption and/or a company being "run" by certain special interest groups.

//If monoplies included rent-seeking expenditures in their cost curves, the graph would differ from the one seen here, showing lower output and a higher ATC cost curve//

//CEO's of monopolies, like Brian Roberts of Comcast Inc. above, will use rent-seeking behavior in order to maximize their profits.//

Review Question: Which of these is not a rent-seeking behavior?
A) Lobbying for things like tax regulation, tax spending, etc. B) Charging lower prices on the monopoly's goods C) Cooperating with government in order to make their profits

ADDITIONAL WEBSITES [|Wikipedia: Rent-Seeking] [|Political Economy Terms: Rent-Seeking Behavior] [|Economic Expert-Rent Seeking]

Answer to above question: B