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Can we obtain realistic parameter estimates for the `protection for sale' model?

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Author Info
Devashish Mitra
Dimitrios Thomakos
Mehmet Ulubasoglu

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Abstract

In the Grossman and Helpman (1994) model of endogenous trade protection, sectoral lobbies try to influence an incumbent government that maximizes a weighted sum of political contributions and aggregate welfare. We empirically investigate this model using U.S. and Turkish data. Our specification is more tightly tied to theory than those in existing studies. Additionally, we assume all specific-factor owners to be organized into different lobbies. These changes, validated by hypothesis tests, yield more realistic parameter estimates of the government's concern for aggregate welfare and of the fraction of population organized into lobbies.

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File URL: http://economics.ca/cgi/xms?jab=v39n1/09.pdf
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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 39 (2006)
Issue (Month): 1 (February)
Pages: 187-210
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Handle: RePEc:cje:issued:v:39:y:2006:i:1:p:187-210

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  1. Giovanni Facchini & Marcelo Olarreaga & Peri Silva & Gerald Willmann, 2007. "Substitutability and Protectionism: Latin America’s Trade Policy and Imports from China and India," Development Working Papers 229, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
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  2. Susumu Imai & Hajime Katayama & Kala Krishna, 2008. "Is Protection Really for Sale? A Survey and Directions for Future Research," NBER Working Papers 13899, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Giovanni Facchini & Johannes Van Biesebroeck & Gerald Willmann, 2005. "Protection for Sale with Imperfect Rent Capturing," Development Working Papers 207, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
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  4. Nathan Nunn & Daniel Trefler, 2006. "Putting the Lid on Lobbying: Tariff Structure and Long-Term Growth when Protection is for Sale," NBER Working Papers 12164, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Marianna Belloc, 2007. "Protection for Sale in the EU," Working Papers 100, Sapienza University of Rome, Department of Public Economics. [Downloadable!]
  6. Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April. [Downloadable!] (restricted)
  7. Susumu Imai & Hajime Katayama & Kala Krishna, 2006. "Protection for Sale or Surge Protection?," Working Papers 1114, Queen's University, Department of Economics. [Downloadable!]
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