Are Antidumping Duties for Sale? Case-Level Evidence on the Grossman-Helpman Protection for Sale Model
Carolyn L. Evans () and
Shane M. Sherlund ()
Additional contact information Carolyn L. Evans: Department of Economics, Santa Clara University, 500 El Camino Real,Santa Clara, CA 95053, USA
Shane M. Sherlund: Board of Governors of the Federal Reserve System, Washington, DC 20551, USA
Do contributions to politicians affect trade policy? To examine this question, we have compiled a new, unique database containing information on political donations by the specific firms and labor organizations that have petitioned for antidumping protection from imports, as well as data on the outcomes of their requests. Using an empirical framework based on the Grossman and Helpman (1994) “protection for sale” model, we examine the relationship between antidumping decisions and political activism. Our results indicate that money does matter. We find that politically active petitioners are more likely to receive protection and that antidumping duty rates tend to be higher for that group. In addition, the relationship between the import penetration ratio and duties imposed depends on whether or not petitioners are politically active—antidumping duties are positively correlated with the import penetration ratio for politically inactive petitioners but negatively correlated for politically active petitioners, consistent with the Grossman-Helpman model's predictions.