Entry and Asymmetric Lobbying: Why Governments Pick Losers

Richard Baldwin and Frederic Robert-Nicoud

No 8756, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Governments frequently intervene to support domestic industries, but a surprising amount of this support goes to ailing sectors. We explain this with a lobbying model that allows for entry and sunk costs. Specifically, policy is influenced by pressure groups that incur lobbying expenses to create rents. In expanding industry, entry tends to erode such rents, but in declining industries, sunk costs rule out entry as long as the rents are not too high. This asymmetric appropriablity of rents means losers lobby harder. Thus it is not that government policy picks losers, it is that losers pick government policy.

JEL-codes: F1 L5 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-ent
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Published as Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Entry and Asymmetric Lobbying: Why Governments Pick Losers," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 1064-1093, 09.

Downloads: (external link)
http://www.nber.org/papers/w8756.pdf (application/pdf)

Related works:
Journal Article: Entry and Asymmetric Lobbying: Why Governments Pick Losers (2007)
Working Paper: Entry and Asymmetric Lobbying: Why Governments Pick Losers (2007)
Working Paper: Entry and asymmetric lobbying: why governments pick losers (2007)
Working Paper: Entry and Asymmetric Lobbying: Why Governments Pick Losers (2006)
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:nbr:nberwo:8756

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8756

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().