Technological Progress and Rent Seeking

37 Pages Posted: 23 Apr 2024

See all articles by Vincent Glode

Vincent Glode

University of Pennsylvania - The Wharton School

Guillermo Ordoñez

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2024

Abstract

We model firms’ allocation of resources across surplus-creating (i.e., productive) and surplus-appropriating (i.e., rent-seeking) activities. Our model predicts that industry-wide technological advancements, such as recent progress in data collection and processing, induce a disproportionate and socially inefficient reallocation of resources toward surplus-appropriating activities. As technology improves, firms rely more on appropriation to obtain their profits, endogenously reducing the impact of technological progress on economic progress and inflating the price of the resources used for both types of activities. We apply our theoretical insights to shed light on the rise of high-frequency trading

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Suggested Citation

Glode, Vincent and Ordoñez, Guillermo, Technological Progress and Rent Seeking (April 2024). NBER Working Paper No. w32359, Available at SSRN: https://ssrn.com/abstract=4802573

Vincent Glode (Contact Author)

University of Pennsylvania - The Wharton School ( email )

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Guillermo Ordoñez

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER) ( email )

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