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Trade Policy in Lobbying Equilibrium: With Non-Traded and Traded Final Goods and Intermediate Inputs

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  • Ram C. Acharya

Abstract

type="main" xml:id="ecpo12058-abs-0001"> The paper derives trade policies endogenously for final consumption and intermediate input industries in the presence of a non-traded sector. Contrary to what the existing literature suggests, results show that there is no definite relation between lobbying status and the direction of trade policy of an industry. Trade protection of an industry depends on how its consumption (horizontal) and production (vertical) linkages with other industries reinforce or cancel out its lobbying efforts. To cite a few results, (i) an organized industry may face trade tax, whereas an unorganized one may obtain protection; (ii) an organized downstream industry may not be able to impose trade tax to an unorganized upstream industry, (iii) an organized upstream industry may not hurt unorganized downstream industry, (iv) lobby for non-traded industry alone can influence trade policies, and (v) lobby for traded industry affects the size of the non-traded sector in the economy.

Suggested Citation

  • Ram C. Acharya, 2015. "Trade Policy in Lobbying Equilibrium: With Non-Traded and Traded Final Goods and Intermediate Inputs," Economics and Politics, Wiley Blackwell, vol. 27(2), pages 313-336, July.
    • Handle: RePEc:bla:ecopol:v:27:y:2015:i:2:p:313-336
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    File URL: http://hdl.handle.net/10.1111/ecpo.2015.27.issue-2
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    Cited by:

    1. Stephen Devadoss & Jeff Luckstead, 2020. "US–Brazilian cotton policies," The World Economy, Wiley Blackwell, vol. 43(8), pages 2222-2236, August.
    2. Daryna Grechyna, 2021. "Trade openness and political distortions," Economics and Politics, Wiley Blackwell, vol. 33(3), pages 644-663, November.
    3. Jieun Lee & Iain Osgood, 2019. "Exports, jobs, growth! Congressional hearings on US trade agreements," Economics and Politics, Wiley Blackwell, vol. 31(1), pages 1-26, March.
    4. Jianxing Lyu & Sören Prehn & Yanjie Zhang & Thomas Glauben & Yinchu Zeng, 2021. "Trade creation, political sensitivity and product exclusions: the political economy of agriculture protection in China’s FTAs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 627-657, July.
    5. Jieun Lee & Iain Osgood, 2018. "Exports, Jobs, Growth! Congressional Hearings on US Trade Agreements," Working Papers 667, Research Seminar in International Economics, University of Michigan.

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