Abstract

　The purpose of this paper is to examine how rent seeking activities affect on economic growth. We construct a variety expanding model which incorporates two types of household (workers and the bureaucracy) based on Caselli and Ventura (2000). We assume that firms in intermediate goods sector engage in rent seeking activities in order to keep their market share or monopolistic profit forever. Then, the bureaucracy can increase their utility from gift provided by the firms. In this setting, we show that whether rent seeking activities may increase the growth rate or not depends on how to cover the cost.

JEL Classification code: O4, L12
Keywords: rent seeking, monopolistic competition, R&D-based growth model

 

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