The Political Economy of Rent-Seeking: Evidence from Spain’s Support Policies for Renewable Energy

This paper provides a theoretical framework to explore how the support policies for renewable energies can promote rent-seeking incentives in private firms. We develop political economy of that considers link between regulatory decisions agents and potential scope socially wasteful pursuits. argue systematic public schemes bring as perception shared by entrepreneurs influencing allocations resources is an essential potentially preferable source profit than other for-profit economic avenues. As evidence our claims, applied case Spain illustrate effects on production distribution energy. find behavior Spain’s energy industry, precisely that: (i) regulations have induced market concentration firms, (ii) these firms required increasing premiums survive, (iii) consumers are forced pay through increasingly expensive electricity bills. The analysis reveals some challenges opportunities drive efficient market-based strengthen entrepreneurial competition curb behavior. These insights relevant proposals Spanish industry complying with EU Green Deal sustainable transition comprehensive growth.