RENT-SEEKING, POLITICAL INFLUENCE AND INEQUALITY - A SIMPLE ANALYTICAL EXAMPLE

A simple model allowing an analysis of the interaction between economi c policy decisions and rent-seeking by private agents competing for po litical influence, is developed. Rent-seeking may be of the directly u nproductive type, requiring resources that are withdrawn from producti ve activities, or it may manifest itself as income transfers (corrupti on) to political decision-makers. In the political-economic equilibriu m of the model the extent of rent-seeking, economic policy decisions, income inequality, etc. are endogenously determined.