Wednesday, February 2, 2011

Rent-Seekers---Yes, it is as bad as it sounds---Hint: It involves Ethanol...

RENT SEEKING: "Textbook" definiton:
""The opportunity to capture monopoly rents provides firms with an incentive to use scarce resources to secure the right to become a monopolist. Such activity is referred to as rent-seeking. Rent-seeking is normally associated with expenditures designed to persuade governments to impose regulations which create monopolies. Examples are entry restrictions and import controls. However, rent-seeking may also refer to expenditures to create private monopolies.""
RENT SEEKING: Real-Life Example: A Recovery In Ethanol Helps A.D.M.
''Archer Daniels Midland, the agribusiness conglomerate, said on Tuesday that its quarterly profit jumped 29 percent, a result driven by a recovery in the ethanol industry and an increase in demand for grains.""

""The company’s outlook was bolstered by a recent ruling by the Environmental Protection Agency to allow for a higher percentage blend of ethanol into gasoline. But the company’s chief executive, Patricia A. Woertz, warned that the new regulations would not be a short-term bonanza. She said many older vehicles still had not been approved to use the higher 15 percent ethanol blend.""
BUT with a little more lobbying that inconvenience will be solved too...
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