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The Complementarity Between Endogenous Protection And Direct Foreign Investment

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  • Laixun Zhao

Abstract

This paper studies the endogenous relationship between direct foreign investgment (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. Copyright 1996 Blackwell Publishers Ltd..

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0343.1996.tb00121.x
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Bibliographic Info

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

Volume (Year): 8 (1996)
Issue (Month): 1 (03)
Pages: 61-72

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Handle: RePEc:bla:ecopol:v:8:y:1996:i:1:p:61-72

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0954-1985

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Cited by:
  1. Blonigen, Bruce A. & Ohno, Yuka, 1998. "Endogenous protection, foreign direct investment and protection-building trade," Journal of International Economics, Elsevier, vol. 46(2), pages 205-227, December.
  2. Pi, Jiancai & Zhou, Yu, 2013. "Institutional quality and skilled–unskilled wage inequality," Economic Modelling, Elsevier, vol. 35(C), pages 356-363.
  3. Koichi Kagitani, 2003. "Resistance to Trade Liberalization in Unionized Sector," Open Economies Review, Springer, vol. 14(4), pages 419-435, October.

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