Blog Article

Read the full note in a simple static article page.

Back to Blog

Rent Extraction and Rent Creation in the Economic Theory of Regulation

January 1, 2024Personal original insights and complete outline of corresponding academic theory

Personal Original Insights and Complete Outline of Corresponding Academic Theory

I. Initial Core Observation

1. Discovery of the Essential Difference Between Two Types of Intermediaries

  • Type 1: Value-Creating Intermediaries (Using Apple as a case study)
  • Type 2: Price-Adding Intermediaries (Using real estate agents and insurance agents as case studies)

2. Initial Question and Thinking

  • Why is there such a vast difference in value and function between intermediaries?
  • Are all intermediaries merely adding prices, and does Apple really belong to the traditional intermediary category?

II. Deepening Thinking and Dialectical Counter-Questioning

  • Having substitutes does not mean being essentially the same; Android and Apple are competitors in the same innovation track.
  • Value-creating intermediaries still leave a new category behind, while price-adding intermediaries only make access cheaper when removed.

III. Formation of Original Theoretical Conclusion

  • Value-creating entities generate incremental value through creative integration.
  • Pure rent-extracting intermediaries resell information gaps and increase transaction costs.

IV. Academic Theory Confirmation

  • Core theory: Rent Creation versus Rent Extraction.
  • Proposer: Fred S. McChesney.
  • Proposed time: 1987.

V. Final Core Summary

  • Value-creating entities are value producers with irreplaceability.
  • Pure rent-extracting intermediaries are value distributors and can be replaced.