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Protectionist Lobbying and Strategic Investment

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  • Richard Damania

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    (University of Adelaide, Australia)

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    Abstract

    Why are some uncompetitive industry sectors so effective in lobbying for greater protection and support? This paper attempts to explain the lobbying success of these industries in terms of the strategic role of investment in technology as a credible commitment device. By eschewing potentially profitable investment opportunities firms credibly signal to the government that the cost of a tariff reduction will be substantial. This enables the firms to lobby more effectively for policy concessions. Political considerations may therefore provide a significant incentive for firms to reject investment in newer technologies, even when these lower production costs. Copyright 2003. The Economic Society of Australia..

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    Bibliographic Info

    Article provided by The Economic Society of Australia in its journal Economic Record.

    Volume (Year): 79 (2003)
    Issue (Month): 244 (03)
    Pages: 57-69

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    Handle: RePEc:bla:ecorec:v:79:y:2003:i:244:p:57-69

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    Cited by:
    1. Satoshi Honma, 2005. "Pollution Tax under Lobbying Duopolists," Discussion Papers 22, Kyushu Sangyo University, Faculty of Economics.
    2. Kosteas, Vasilios D., 2008. "Trade Protection and Capital Imports in the Mexican Manufacturing Sector," World Development, Elsevier, vol. 36(12), pages 2822-2837, December.
    3. Hamid Beladi & Lu Liu & Reza Oladi, . "A Holistic View of Trade, Pollution Permits and Abatement," Working Papers 0002, College of Business, University of Texas at San Antonio.

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