Does rent-seeking entrepreneurship hurt the environment? Historical insights from the US meatpacking industry

Abstract

This paper uses a historical case study of the American meatpacking industry to examine how rent-seeking entrepreneurship can harm environmental outcomes. We first show that Chicago’s largest meatpackers simultaneously reduced pollution and their production costs through innovative by-product utilization. We then demonstrate how these successes provoked rent-seeking behavior from less efficient competitors who pressured policymakers into dismantling the system of industrial organization created by the Chicago meatpackers. Our analysis reveals that rent-seeking behavior can obstruct market-based innovations that promote sustainability. We outline a novel causal model in which rent-seeking actively undermines the capacity of private-sector initiatives to improve environmental outcomes. Our findings challenge some of the dominant assumptions in the environmental policy, management studies, and circular economy literatures. We suggest that profit-seeking entrepreneurship in a regime of competitive and lightly regulated markets may, at least in some circumstances, deliver superior environmental results compared to management by elected officials.