Final answer:
Rent seeking behavior in the context of a price ceiling like rent control refers to attempts to influence the individual in charge of allocating scarce housing, leading to an inefficient distribution of resources.
Step-by-step explanation:
An example of rent seeking behavior occurs when people bribe or influence the individual in charge of allocating a scarce resource, like housing under a price ceiling such as rent control. In cities like New York, San Francisco, and Washington D.C., rent control policies exist which limit how much a landlord can increase rent. This creates a shortage as the supply of apartments fails to meet demand, leading individuals to potentially engage in rent-seeking behavior to secure housing.
Policies like price controls may appear to benefit one group, such as renters, but can result in unintended consequences, such as landlords reducing the number of rental units, leading to a scarcity that affects would-be renters. This scarcity can drive individuals to seek favor with those allocating the limited housing, often through means that can skew resource distribution further from its efficient use. Rent-seeking behavior, in this context, is an attempt to obtain economic gain without reciprocating any benefits back to society through wealth creation.