A Comparison of Optimal Tariffs and Welfare under No Lobbying, Domestic Lobbying and Domestic-foreign Lobbying

Xianhai Huang, Mobing Jiang and Jie Li

The World Economy, 2015, vol. 38, issue 1, 136-150

Abstract: type="main" xml:id="twec12251-abs-0001">

Whether and what type of the lobbying-induced trade policies can improve the domestic welfare? We show that as compared to the case of no lobbying and the case of domestic lobbying, the domestic-foreign lobbying may achieve the lowest tariff and may also realise the highest welfare for the domestic country. Our finding provides a theoretical explanation to the prevalent lobbying competition between Asian firms and US firms in USA recently. We argue that the domestic-foreign lobbying may contribute to a freer trade in the domestic country, and lobbying competition may be one of the strongest forces pushing for trade liberalisation.

Date: 2015
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