A Theory of Complementarity between Rent Seeking and Production

This paper uses a formal model to analyze the effects of rent seeking contest on production when the contestants are both rent seekers and producers and production output is an input of rent seeking effort. Great economies of scale in rent seeking and an even distribution of rent seeking capability among the contestants generate intense rent seeking rivalry, strong concern for relative productive and rent seeking capability and, larger production. In the extreme when rent seeking contest is very tense, the relative size of production input to rent seeking input grows and the contestants paradoxically behave and look more like producers rather than rent seekers. As applications, the paper studies how rent seeking contest affects the productive and rent seeking behavior of members of society, corporate workers, firms, political parties and states