Rent-setting

Rent-setting^[2] (also spelled as rent setting;^[3] simplified Chinese: 设租; traditional Chinese: 設租), also known as rent-creating, ^[4] refers to the act of governments or bureaucrats using their power to intervene in the market, resulting in the formation of new economic rents and creating rent-seeking opportunities for certain market entities.^[5] In short, it means that the power itself committed an act in order to take a bribe.^[6]

Rent-setting

Initiator	Appelbaum and Katz
Introduced	1987
Synonym	rent-creating[1]

Rent-setting
Simplified Chinese	设租
Traditional Chinese	設租
Transcriptions Standard Mandarin Hanyu Pinyin Shèzū

The concept of rent-setting was coined by Appelbaum and Katz in 1987.^[7] This theory holds that since the regulator itself may become a rent-seeker, the rent-seeker itself will become a rent-setter and thus endogenously determine the size of the rent.^[7]

Rent-setting is part of the chain of the rent-seeking process. ^[8] It can generally be divided into three types: unintentional rent-setting, passive rent-setting and active rent-setting.^[9]

In a 'power-money' transaction, rent-setting is from 'power' to 'money', while rent-seeking is often 'money-power-money increment'. ^[10] In fact, rent seeking and rent setting are two sides of the same behavior and cannot be separated. ^[11]

See also

• Rent-seeking
• Rent extraction
• Economic rent