Economic Rent vs Rent-Seeking

Economic rent is the payment to a factor of production above the minimum necessary to keep it in its current use.

Economic rent is the surplus a factor earns over its next best alternative. For example, a worker may earn economic rent if their wage exceeds what they could earn in another job. Economic rent arises due to factors' scarcity or unique characteristics.

Rent-seeking is spending resources to gain wealth through favorable policy or market position rather than by producing value.

Examples include lobbying for subsidies, tariffs, or licenses that boost a firm's profits at society's expense. It wastes resources and creates inefficiency because effort goes to capturing existing wealth rather than creating new output.