On The Social Consequences Of Rent-seeking

Rent-seeking changes the market structure, which will bring much impact on the society undoubtedly. Besides net loss of social welfare, because of the changes of distribution and that of number of trader and trading qualification so ethic and consumers' psychology will also be affected, which is often ignored by many researchers.The author firstly pays attention to ethical result of rent-seeking. Based on Rawls' theory about justice, the author considers that since rent-seeking limits consumer's economic choices, deprives people's opportunities of transaction, investment and so on, and since rent-seeking makes the distribution of social welfare to be propitious to dominant groups, but not to the lowest favored ones, rent-seeking breaks the principles of justice in many ways, which means rent-seeking is unjust. Secondly, the author insists that the assumption of the stability of consumers' preference is too strict. For if other conditions are stable, consumers always prefer more choices. Once the set of choice changes consumers' preference will be affected and change, too. In turn demand curve of the goods will change and move, so the author builds an extended utility function with which the author try to prove that the net loss of social welfare caused by monopoly is more than that was expected before.In the last chapter the author tries to analyze the actual situation of China with the conclusions drew by this paper. On one hand, at present limit to consumer's economic freedom and inequality of opportunities can be regarded as the result of rent-seeking in essential. On the other hand, rent-seeking is also an important reason for the disparity of income among different areas, callings and groups.To restrain rent-seeking, firstly, it is urgent to eliminate rent through innovation of institution. Secondly, we must build powerful system for supervision andpunishment. Thirdly, earning of potential rent-setting parts' should be improved and it is necessary to educate them. Then we can establish a system under which people can not do, dare not do, need not do and will not do anything about rent-seeking.