Institutional Analysis Of Rent-seeking Behavior In The Construction Market

Since the reform and opening up, construction industry has made considerable progress after thelong-term high-speed development，and becomes an important pillar of the national economy in China。However, due to the imperfect construction market and the dual pricing system in the process of markettransition, construction areas have been hardest hit by the rent-seeking behavior. Especially in thecontext of large-scale engineering construction investment, construction projects, rapid construction, rentseeking is more prominent in the construction market.The paper analyses the rent-seeking activities in the construction market in China by using therent-seeking theory of modern economics, and makes the definition of rent-seeking and the distinctionbetween rent-seeking and profit-seeking, corruption. Rent-seeking is rooted in the deficiencies in thesystem, which can not simply be attributed to market failure and government failure. The paperdescribes the rent-seeking performance of the planning and designing, bidding, supervision andacceptance of the construction market, and the serious harm caused by the rent-seeking behavior fromthe principles of economics. Rent-seeking activities in the construction market not only lead to the lossof social wealth and the tremendous waste of social resources, inefficient operation of the marketmechanism, but also poison the social atmosphere, and make the collapse of social norms, and seriouslydamage the government’s credibility and finally may lead to a crisis of confidence.This paper elaborates institutional roots of rent-seeking activities in the construction market by thedeep analysis of rent-seeking in the view of institutional economics. The paper makes deep analysis ofthe institutional causes of the rent-seeking behavior in the construction market on the new institutionaleconomics perspective, and pointes out that the lack of formal system and the weakening of the informalsystem and path dependence are the root cause of the spread of rent-seeking behavior in the constructionmarket. By the using of the theory of institutional innovation, through the establishment of rentdissipation mechanism, the improvement of the construction market system, and the culture of theconstruction industry intermediary organizations and the enhancement of the anti-rent-seeking inherentconstraint mechanism, we are building the anti-rent-seeking institutional system, in order to reduce andeliminate the occurrence of rent-seeking activities in the construction market.