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Glossary

Terms Starting With Letter R
  • Rents, rent-seeking

    Economic “rents” are profits which are higher than would be expected in a situation of theoretically perfect competition.   (For example, if a company or government has a monopoly over a particular resource, they can command a higher price for it.) “Rent-seeking” describes the behaviour of individuals and businesses who try to get special rights over the resource, rather than adding value to it or creating new wealth.  (That is, investing in getting a bigger slice of the cake rather than doing anything to make the cake bigger.)

  • Royalties

    When a company starts pumping oil it pays a “royalty” (in effect, a tax) on the amount of oil produced. This is usually a relatively small percentage of production, and the government will be entitled to an addition share of the “profit oil.” (See also, “Cost Oil, Profit Oil”)