Tariff Protection Revisited: Implications for Strategic Import Tariff

Jongmin Lee
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Jongmin Lee: Kangwon National University

Korean Economic Review, 2003, vol. 19, 131-152

Abstract: This paper employs the influence-driven approach to analyze the impact of lobbying on the strategic trade policy in a model of Cournot duopoly. That is to extend the analysis of Brander and Spencer(1984). When an industry special interest group lobbies the domestic government for trade protection, the politically sustainable equilibrium level of protection is higher than the optimal strategic level. This implies that the presence of lobbying reinforces the argument for strategic intervention designed to capture proï¬ ts from rival foreign ï¬ rms(or industry). This paper also shows that under various scenarios with diflerent political conditions the politically-determined tariffs are always higher than theoptimal-shifting tariff.

Keywords: Lobbying; political equilibrium tariff; equilibrium contribution (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2003
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