A rent-seeking perspective on privatization

Abstract

This paper considers the recent wave of privatization activity as a consequence of rent-seeking among competing special-interest or pressure groups. The dynamic interaction of interest groups through a political system generates repetitive, irregular waves or cycles of rent-creation, rent-transfer and, ultimately, rent-dissipation as the essence of the political process that determines transitory political outcomes (legislation, administrative decisions, as judicial interpretations). This perspective is used as a framework for speculation about the general and county-specific determinants of the worldwide upswing in privatization activity and the differences in privitization experiences of countries such as Canada and the United Kingdom.