Endogenous Lobbying Positions

Larry Dongxiao Qiu ()

Review of International Economics, 2008, vol. 16, issue 4, pages 641-653

Abstract: This paper develops a two-country, two-firm model to study equilibrium lobbying positions in intra-industry trade. A firm chooses either a protectionist position or a free-trade position. The model predicts that taking the free-trade lobbying position is an efficient firm's dominant strategy. If two firms have high costs (or when the demand is very weak), there exist two equilibria: either both firms take the free-trade position or both take the protectionist lobbying position. In other cases, both firms taking the free-trade lobbying position is a unique equilibrium. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.

Date: 2008

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