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Abstract

This article examines the influence of campaign contributions on agricultural subsidies. Empirical results revealed that rent-seeking works, i.e. contributions, influence agricultural subsidies in the manner they best serve contributors' economic interests. Eliminating campaign contributions would significantly decrease agricultural subsidies, hurt farm groups, benefit consumers and taxpayers, and increase social welfare by approximately $5.5 billion. Although contributions are not the only determinants of agricultural subsidies, investment returns to farm PAC contributors are quite high ($1 in contributions brings about $2,000 in policy transfers). In fact, the results are in sharp contrast to the "truthful contributions" assumption of the Grossman-Helpman model. Copyright 2001 Blackwell Publishers Ltd.

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Article provided by Wiley Blackwell in its journal Economics and Politics.

Volume (Year): 13 (2001)
Issue (Month): 3 (November)
Pages: 257-279

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Handle: RePEc:bla:ecopol:v:13:y:2001:i:3:p:257-279

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1. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
   
   • Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September.
   • Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
   • Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
   • Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
2. Honma, Masayoshi & Hayami, Yujiro, 1986. "Structure of agricultural protection in industrial countries," Journal of International Economics, Elsevier, vol. 20(1-2), pages 115-129, February.
3. Mueller, Dennis C & Stratmann, Thomas, 1994. " Informative and Persuasive Campaigning," Public Choice, Springer, vol. 81(1-2), pages 55-77, October.
4. Gardner, Bruce L, 1992. "Changing Economic Perspectives on the Farm Problem," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 62-101, March.
5. Beghin, John C. & Kherallah, Mylene, 1994. "Political Institutions and International Patterns of Agricultural Protection," Staff General Research Papers 1602, Iowa State University, Department of Economics.
   
   • Beghin, John C & Kherallah, Mylene, 1994. "Political Institutions and International Patterns of Agricultural Protection," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 482-89, August.
6. Lopez, Rigoberto A & Pagoulatos, Emilio, 1996. "Trade Protection and the Role of Campaign Contributions in U.S. Food and Tobacco Industries," Economic Inquiry, Western Economic Association International, vol. 34(2), pages 237-48, April.
7. Esty, Daniel C & Caves, Richard E, 1983. "Market Structure and Political Influence: New Data on Political Expenditures, Activity, and Success," Economic Inquiry, Western Economic Association International, vol. 21(1), pages 24-38, January.
8. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.

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Cited by:

1. Fredriksson, Per & Mamun, Khawaja, 2009. "Tobacco Politics and Electoral Accountability in the United States," Working Papers 2009003, Sacred Heart University, John F. Welch College of Business.
2. Allcott, Hunt & Lederman, Daniel & Lopez, Ramon, 2006. "Political institutions, inequality, and agricultural growth : the public expenditure connection," Policy Research Working Paper Series 3902, The World Bank.
3. Lopez, Rigoberto A. & Hathie, Ibrahima, 2002. "Is Protection for Sale in U.S. Food Industries?," Research Reports 25182, University of Connecticut, Food Marketing Policy Center.
4. Rigoberto A. Lopez & Xenia Matschke, 2005. "Food Protection for Sale," Working papers 2005-13, University of Connecticut, Department of Economics, revised Nov 2005.
   
   • Rigoberto A. Lopez & Xenia Matschke, 2006. "Food Protection for Sale," Review of International Economics, Wiley Blackwell, vol. 14(3), pages 380-391, 08.
   • Lopez, Rigoberto A. & Matschke, Xenia, 2005. "Food Protection for Sale," Research Reports 25195, University of Connecticut, Food Marketing Policy Center.
5. Gawande, Kishore & Hoekman, Bernard, 2006. "Lobbying and agricultural trade policy in the United States," Policy Research Working Paper Series 3819, The World Bank.
   
   • Gawande, Kishore & Hoekman, Bernard, 2006. "Lobbying and Agricultural Trade Policy in the United States," International Organization, Cambridge University Press, vol. 60(03), pages 527-561, July.
   • Gawande, Kishore & Hoekman, Bernard, 2006. "Lobbying and Agricultural Trade Policy in the United States," CEPR Discussion Papers 5634, C.E.P.R. Discussion Papers.

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