Evidence and explanation for the Tariff-lobbying paradox: endogenous Tariffs fall as protectionist lobbying rises

Stephen Magee, Hongshik Lee and Junyun Kim ()

Applied Economics, 2019, vol. 51, issue 40, 4368-4384

Abstract: Recent empirical evidence suggests that U.S. protectionist lobbying expenditures rose while U.S. trade barrier fell. We find that the same result holds in our panel data sample from 28 countries between 1995 and 2011. We find two economic drivers cause the paradox between increasing protectionist lobbying and decreasing trade barrier. First, trade barriers decline as country capital-labour ratio endowments rise because of the rising political and economic power of capital that lobbies for free-trade. Second, factor intensities in production become more similar as factor-intensity convergence. This flattens the production possibility curve between exportable and import-competing production so that changes increased magnification in both factor rewards. In our panel, the magnification parameters are twice as high for capital as for labour (8.6 vs. 5.1). And, the elasticity of the capital return with respect to country capital-labour factor endowment ratios (.59) is nearly twice those of labour (.22). Increased magnification causes thus labour’s increased lobbying for protection to be more than offset by increased capital lobbying against protection. In short, while an increasing labour lobbies for protection as countries advance, combined tariff and non-tariff protection (OTRI) decline significantly as advanced countries get richer. This explains the tariff-protectionist-lobbying paradox.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2019.1591604 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:51:y:2019:i:40:p:4368-4384

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2019.1591604

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().