LOBBYING UNDER ASYMMETRIC INFORMATION

Bilgehan Karabay

Economics and Politics, 2009, vol. 21, issue 1, 1-41

Abstract: We analyze an informational theory of lobbying in the context of strategic trade policy. A home firm competes with a foreign firm to export to a third country. The home policy‐maker aims to improve the home firm's profit using an export subsidy. The optimal export subsidy depends on the demand conditions in the third country, which are unknown to the policy‐maker. The home firm can convey this information to the policy‐maker via costly lobbying. Surprisingly, the presence of lobbying costs can be advantageous for both: it makes the home firm's lobby effort credible and eases the policy‐maker's information problem. We identify the conditions under which lobbying is beneficial on balance and the conditions under which it is harmful.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/j.1468-0343.2008.00334.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:21:y:2009:i:1:p:1-41

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0954-1985

Access Statistics for this article

Economics and Politics is currently edited by Peter Rosendorff

More articles in Economics and Politics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().