Review of Government Intervention and Rent Seeking

These flashcards cover key concepts related to government intervention, crony capitalism, moral hazard, and rent seeking, based on the student's lecture notes.

Government Intervention

The act of a government taking action to influence or regulate markets or the economy.

Crony Capitalism

A system where business success depends on close relationships with government officials, leading to favoritism and corruption.

Moral Hazard

A situation where a party is incentivized to take risks because they do not bear the consequences of their actions, usually due to being shielded from risk.

Rent Seeking

The practice of increasing one's share of existing wealth without creating new wealth, often through manipulating the political environment.

Economic Rent

The payment to a factor of production in excess of the cost needed to bring that factor into production.

Political Pressure

Influence exerted by individuals or groups on politicians or public officials to achieve specific policies or outcomes.

Illiberal Democracy

A political system that is nominally democratic but where individual freedoms are restricted and power is concentrated in a ruling elite.

Public Goods

Goods that are non-excludable and non-rivalrous in consumption, meaning they are available for everyone to use without reducing their availability to others.

Rent Seeking vs. Lobbying

While rent seeking involves manipulating government policies for personal or economic gain, lobbying can be for public goods and not merely self-serving interests.

Subsidized Insurance

Insurance that is financially supported by the government, often leading to moral hazards by encouraging risky behaviors.