![]() ![]() In terms of financial constraints, rent-seeking non-productive inputs and innovative R&D investments require large amounts of capital, and the monopoly profits accumulated by monopoly enterprises in the early stage can directly provide financial support for rent-seeking and innovation. In terms of innovation, according to Chen and Schwartz (2013), monopolistic firms are more motivated to innovate than non-monopoly firms, and based on the expanded quality innovation model of Acemoglu and Cao (2015), the higher the degree of monopoly, the more R&D investment in monopoly firms. In terms of rent-seeking, entities can be determined as rent-seeking monopolies directly according to the definition of rent-seeking, that is, the non-productive profit-seeking activity for securing monopolistic profits. Certainly, rent-seeking and innovation may also occur in non-monopoly enterprises, but this is far less likely to happen than in monopoly enterprises. The driving role of innovation in economic growth is not only supported by neoclassical economic growth theory ( Solow, 1956), but also further confirmed by the theory of endogenous economic growth in the fields of product category innovation ( Judd, 1985 Grossman and Helpman, 1991) and product quality innovation ( Grossman and Helpman, 1991 Aghion and Howitt, 1992). The total welfare losses caused by rent-seeking to society or groups have been denounced by academic circles ( Tullock, 1967 Krueger, 1974 Posner, 1975 Cowling and Mueller, 1978 Dechenaux et al., 2015). Although both rent-seeking (cutting the “cake”) and innovation (producing the “cake”) can achieve the profit-seeking purposes, their impacts on social welfare are diametrically opposite. In choosing rent-seeking, they can win a bigger portion of a “cake” in the zero-sum game, whereas choosing innovation gets them an entire new “cake” in the field. With the control of existing resources, monopolies can choose between the behaviors of rent-seeking and innovation. Monopoly enterprises (monopolies) are the common concern of all sectors of society as their every single move may have a huge impact on the industry, the real economy, and even the entire society. Originally published in Simplified Chinese in China Industrial Economics. The full terms of this licence may be seen at. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. ![]() This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Copyright © 2019, China’s Industrial Economics License ![]()
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