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]

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[edit]


  1. ^ "Revisiting progressive reform". The Economic Observer. 2010-01-29.
  2. ^ Timothy Lane; Nina Oding; Paul J.J. Welfens (6 December 2012). Real and Financial Economic Dynamics in Russia and Eastern Europe. Springer. pp. 181–. ISBN 978-3-642-55512-1.
  3. ^ P. Rao (3 December 2002). The Economics of Transaction Costs: Theory, Methods and Application. Palgrave Macmillan UK. pp. 102–. ISBN 978-0-230-59768-6.
  4. ^ Chi Fulin (2002). The Next Step in China's Reform. China Economic Publishing House. ISBN 978-7-5017-5699-5.
  5. ^ Shi Yan (1 June 2014). Study of Communication Failure in Chinese Financial Media. China Social Sciences Press. pp. 50–. ISBN 978-7-5161-4572-2.
  6. ^ Chen Yijin (2016-05-07). "Distinguish between a good hospital and a bad one, then what?".
  7. ^ a b Xie Ping; Lu Lei (2005). An Economic Analysis of Financial Corruption in China: Institutions, Behavior and Mechanism Design. Citic Press. pp. 82–. ISBN 978-7-5086-0374-2.
  8. ^ Tak-Wing Ngo; Yongping Wu (4 December 2008). Rent Seeking in China. Routledge. pp. 193–. ISBN 978-1-134-03441-3.
  9. ^ Luo Zhixian (2002). Rule of law basis for property rights reform of state-owned enterprises. Standards Press of China. ISBN 978-7-5066-2991-1.
  10. ^ Chen Yijin (April 7, 1994). "An economic analysis of rent setting and rent seeking behaviour" (PDF). Economic Research Journal. ISSN 0577-9154.
  11. ^ Li Beifang (2016-08-18). "It is capital, not power, that seeks rent". Utopia.