Protection versus Free Trade: Lobbying Competition between Domestic and Foreign Firms

Dapeng Cai and Jie Li

Southern Economic Journal, 2014, vol. 81, issue 2, 489-505

Abstract: This article considers how political interaction between policymakers and domestic and foreign firms endogenously determines tariff rates. We show that because of lobbying competition between foreign and domestic firms, even a less competitive foreign firm can successfully elicit a tariff reduction under reasonable conditions. Moreover, lobbying competition may also increase the level of aggregate domestic welfare when the market powers of the competing firms are sufficiently alike.

Date: 2014
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https://doi.org/10.4284/0038-4038-2012.144

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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:81:y:2014:i:2:p:489-505

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