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Crony Capitalism

“Crony capitalism” occurs when a private business firm or corporation uses political power to gain some favor or to obtain an advantage that is not otherwise available through market competition or is available only at a higher cost. In a capitalist or market economy, economic goods (products or services) are exchanged freely between market actors. Buyers and sellers compete to secure the best deals for themselves, and the resulting prices reflect their joint preferences. Over a sequence of exchanges, if the value received exceeds the total cost, then an individual or firm attains a profit. But when this profit—or some other type of gain, including the avoidance of regulatory costs, the minimization of loss, or even the acquisition of new business—is determined, at least in ...

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