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Rent-Seeking Behavior and Economic Justice: A Classroom Exercise

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  • Aaron Pacitti

    (Siena College)

  • Michael Cauvel

    (University of Southern Maine)

Abstract

Rent-seeking behavior is when individuals or firms acquire above-market returns by exercising economic and political power. We introduce an active-learning exercise, with discussion questions and extensions, to illustrate implications of rent seeking for efficiency, equity, economic justice, and democracy. Students act as corporate decision makers allocating resources among physical, financial, and political investment. Instructors use the results to highlight distinctions between productive and nonproductive activities, and ways in which individual firm incentives may differ from socially optimal firm behavior. This allows for discussions of broader issues, such as how rent seeking can undermine democratic ideals and perpetuate inequality.

Suggested Citation

  • Aaron Pacitti & Michael Cauvel, 2023. "Rent-Seeking Behavior and Economic Justice: A Classroom Exercise," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 49(1), pages 88-103, January.
    • Handle: RePEc:pal:easeco:v:49:y:2023:i:1:d:10.1057_s41302-022-00225-y
    DOI: 10.1057/s41302-022-00225-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Rent seeking; Lobbying; Inequality; Pedagogy;
    All these keywords.

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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