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Simple measures of endogenous free-riding in protectionist lobbies

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  • Magee, Stephen
  • Lee, Hak Loh
  • Lee, Hongshik

Abstract

Even though there is a well-known empirical and theoretical link between lobby and the free-rider problem, the existing literature only attributes its findings to the free-rider rather than the measurement of its extent. We develop broader theoretical micro-foundations for measuring free-riding and investigate the determinants of tariff rates from the perspective of corporate lobbying and free-riding. Our estimation result shows that the degree of free-riding not only varies across industries but is particularly high in larger industries indicating the underutilization of lobbying. The tariff rates under monopoly are about 8 times higher than under perfect competition in most industries suggesting that stakeholders should maintain higher industry protection levels through lobbying.

Suggested Citation

  • Magee, Stephen & Lee, Hak Loh & Lee, Hongshik, 2017. "Simple measures of endogenous free-riding in protectionist lobbies," Economic Modelling, Elsevier, vol. 60(C), pages 324-333.
    • Handle: RePEc:eee:ecmode:v:60:y:2017:i:c:p:324-333
    DOI: 10.1016/j.econmod.2016.10.006
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    More about this item

    Keywords

    Lobbying; Tariffs; Free-rider problem;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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