The Complementarity between Endogenous Protection and Direct Foreign Investment

Laixun Zhao

ビジネス創造センターディスカッション・ペーパー (Discussion papers of the Center for Business Creation) from Otaru University of Commerce

Abstract: This paper studies the endogenous relationship between direct foreign investment (DFI) and trade restriction. A domestic labor union interested in both employment and wages bargains with a foreign firm and lobbies against foreign imports. By endogeneizing the wage rate and incorporating resource-using lobbying, we show that more DFI results in higher lobbying efforts and lower imports under fairly general conditions, i.e. a reversal of quid pro quo DFI. We also conduct comparative statics analysis on wages and lobbying efforts.

Keywords: Lobbying; Endogenous Protection; Quid Pro Quo DFI (search for similar items in EconPapers)
Pages: 19 pages
Date: 1995-02
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Published in Discussion paper series (1995), 13: 1-19

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Related works:
Journal Article: THE COMPLEMENTARITY BETWEEN ENDOGENOUS PROTECTION AND DIRECT FOREIGN INVESTMENT (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:ota:busdis:10252/4186

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