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Simple measures of endogenous free-riding in protectionist lobbies

Stephen Magee, Hak Loh Lee and Hongshik Lee

Economic Modelling, 2017, vol. 60, issue C, 324-333

Abstract: Even though there is a well-known empirical and theoretical link between lobby and the free-rider problem, the existing literature only attributes its findings to the free-rider rather than the measurement of its extent. We develop broader theoretical micro-foundations for measuring free-riding and investigate the determinants of tariff rates from the perspective of corporate lobbying and free-riding. Our estimation result shows that the degree of free-riding not only varies across industries but is particularly high in larger industries indicating the underutilization of lobbying. The tariff rates under monopoly are about 8 times higher than under perfect competition in most industries suggesting that stakeholders should maintain higher industry protection levels through lobbying.

Keywords: Lobbying; Tariffs; Free-rider problem (search for similar items in EconPapers)
JEL-codes: F13 D7 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:ecmode:v:60:y:2017:i:c:p:324-333