COVID-19 and Rent-Seeking Competition

Abstract

The COVID-19 pandemic affects the everyday and working life of several parts of the population. Politicians, scientists and entrepreneurs face new challenges, decisions are made under enormous uncertainty. Under the primacy of infection control, restrictive political measures have been implemented worldwide with economic, social and mental-health consequences which can hardly be assessed at present. Not at least, the pandemic has eroded bastions of freedom whose existence would have been considered unshakeable in many countries just a year ago. The present paper does not aim at a (final) evaluation of these measures. Rather, the theory of rent-seeking will be used to sketch a mechanism that will be stimulated by the current crisis and that will promote rent-seeking competition that could finally result in non-efficient resource allocations. Given a high degree of uncertainty and incomplete information on both sides of the political market, interest groups try to take advantage from this situation by putting the political actors under pressure. At the end of this chain of effects occurs the problem of restaurant bills and the question: “Who is going to pay for this?”