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Lobbying for Globalization

Michael Blanga-Gubbay, Paola Conconi () and Mathieu Parenti ()

No 14597, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we show that the political economy of free trade agreements (FTAs) is dominated by large firms engaged in international trade that support the ratification of these agreements. We develop a model of endogenous lobbying on FTAs by heterogeneous firms, which can explain why only large pro-FTA firms select into lobbying. The model also delivers predictions on the intensive margin of lobbying. In line with these predictions, we find that larger firms spend more supporting a given FTA, and individual firms spend more supporting FTAs that generate larger gains - i.e. larger improvements in access to foreign consumers and suppliers and smaller increases in domestic competition - and that are more likely to be opposed by politicians.

Date: 2020-04
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