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Family Control and the Rent-Seeking Society

Authors


Randall Morck, randall.morck@ualberta.ca; Bernard Yeung, byeung@stern.nyu.edu

Abstract

A high level of trust within a small elite, like a low level of trust in society at large, may be a serious impediment to economic development. This is because such concentrated high trust among the elite promotes political rent seeking, known to retard growth. We propose that entrusting the governance of a country's great corporations to a few wealthy families promotes this undesirable distribution of trust. Preliminary empirical evidence and arguments grounded in game theory support this view.

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