Rent-seeking theory and pressure groups in rent-seeking process

The Keynesian activism which gives an intervesionist role to the government is exposed to serious criticism since 1 970's. The foundation of these criticism is based on a new economic view which suggests to reduce the public sector's share in the economy. This second view is in fact older than the first one and is stemmed from the classical view of economy. The interventionist view of the government is criticized both for its targets and for its efficiency in obtaining these targets. The public choice theorists directs its critiques to the operation of the political process. They especially emphasize the distortions and inefficiencies caused by rent-seeking activities. The rent-seeking theory deals with the efforts of individuals and groups to capture some advantages through influencing the political process and the effects of these efforts. This study is a survey in which we tried to evaluate the basic suggestions of the rent-seeking theory and the role of the pressure groups in the rent-seeking process. In the first chapter of the study we have given the definitions of the concepts of rent and rent-seeking, and introduced the rent-seeking process and the domain of rent-seeking and then we discussed the social costs of rent-seeking. The second chapter is devoted to the role of the pressure groups in the rent-seeking process. Here we investigated the actors of the poliitical process with respect to their roles in rent-seeking activities. After that we concentrated on the pressure groups, the instutions they are directed to, and on the ways and means they use in seeking rents.