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The returns from rent-seeking: campaign contributions, firm subsidies and the Byrd Amendment

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  • Benjamin H. Liebman
  • Kara M. Reynolds

Abstract

This is the first empirical study to examine Congressional support of a new law that distributes antidumping duties to protected firms. Because the law produces a transparent measure of how much each firm was rewarded for its efforts to secure the bill's passage, it provides researchers with a unique opportunity to study the link between the expected financial returns to firms, campaign contributions, and Congressional behaviour. Our results indicate that campaign contributions from beneficiaries increased the likelihood that lawmakers would sponsor the law, while contributions from the law's beneficiaries increased with the rewards they expected to receive.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 39 (2006)
Issue (Month): 4 (November)
Pages: 1345-1369

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Handle: RePEc:cje:issued:v:39:y:2006:i:4:p:1345-1369

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References

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  1. Chappell, Henry W, Jr, 1982. "Campaign Contributions and Congressional Voting: A Simultaneous Probit-Tobit Model," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 77-83, February.
  2. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  3. COLLIE, David R. & VANDENBUSSCHE, Hylke, . "Tariffs and the Byrd amendment," CORE Discussion Papers RP -1890, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Baldwin, Robert E & Magee, Christopher S, 2000. " Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills," Public Choice, Springer, vol. 105(1-2), pages 79-101, October.
  5. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  6. Wendy L. Hansen & Thomas J. Prusa, 1996. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Departmental Working Papers 199621, Rutgers University, Department of Economics.
  7. Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
  8. Benjamin Liebman, 2004. "ITC voting behavior on sunset reviews," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(3), pages 446-475, September.
  9. Reynolds, Kara M., 2006. "Subsidizing rent-seeking: Antidumping protection and the Byrd Amendment," Journal of International Economics, Elsevier, vol. 70(2), pages 490-502, December.
  10. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December.
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Citations

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Cited by:
  1. Carolyn L. Evans & Shane M. Sherlund, 2006. "Are antidumping duties for sale? case-level evidence on the Grossman-Helpman protection for sale model," International Finance Discussion Papers 888, Board of Governors of the Federal Reserve System (U.S.).
  2. Wang, Xiaosong & Li, Kunwang & Xie, Shenxiang & Hou, Jack, 2013. "How is U.S. trade policy towards China determined?," China Economic Review, Elsevier, vol. 27(C), pages 25-36.
  3. John Gilbert & Reza Oladi, 2011. "Net Campaign Contributions, Agricultural Interests, and Votes on Liberalizing Trade with China," Working Papers 201102, Utah State University, Department of Economics and Finance.
  4. Kara M. Reynolds, 2005. "Anticipated versus Realized Benefits: Can Event Studies Be Used To Predict the Impact of New Regulations?," International Trade 0512005, EconWPA.

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