Rent seeking, technology commitment, and economic development

Real-world rent seeking has been a puzzle to political economists, as they cannot observe as much direct social cost as commonly believed. In this paper. we identify socially inefficient technology commitment as a device for rent seekers to improve their positions in a zero-dissipation contest. We show that the domestic industry may forgo innovation opportunities which would be optimal decisions without rent-seeking uncertainty. This analysis also explains some conspicuous features of the farm subsidy programs in the US. We conclude by discussing rent-seeking's dynamic implication: the retarding of economic development.