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Special-Interest Lobbying and Endogenous Commodity Taxation

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Author Info
Avinash Dixit (Princeton University)

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Abstract

This paper offers an initial exploration of a positive counterpart to the normative Ramsey-Diamond-Mirrlees theory of optimal commodity taxation. A model of lobbying for taxes and subsidies on production and consumption in an open economy is constructed, generalizing the Crossman-Helpman model of protection. It is found that the equilibrium of the lobbying process generally violates aggregate production efficiency, contrary to the normatively optimal policy. The outcome also differs markedly from the model of lobbying for protection: the equilibrium policy involves mostly production subsidies, not import tariffs.

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File URL: http://college.holycross.edu/eej/Volume22/V22N4P375_388.pdf
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Publisher Info
Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 22 (1996)
Issue (Month): 4 (Fall)
Pages: 375-388
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:eej:eeconj:v:22:y:1996:i:4:p:375-388

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Related research
Keywords: Equilibrium; Lobbying; Subsidies; Taxation; Taxes;

Other versions of this item:

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Hammond, Peter J, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," Review of Economic Studies, Blackwell Publishing, vol. 46(2), pages 263-82, April. [Downloadable!] (restricted)
  2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Aidt, T.S., 2000. "The Rise of Environmentalism, Pollution Taxes and Intra-Industry Trade," Cambridge Working Papers in Economics 0017, Faculty of Economics, University of Cambridge. [Downloadable!]
    Other versions:
  2. Nicholas Shunda, 2005. "A Model of Rights," Working papers 2005-53, University of Connecticut, Department of Economics. [Downloadable!]
  3. Georgios E. Chortareas & Stephen M. Miller, 2002. "Central Banker Contracts, Incomplete Information, and Monetary Policy Surprises: In Search of a Selfish Central Banker?," Working papers 2002-29, University of Connecticut, Department of Economics. [Downloadable!]
    Other versions:
  4. Joan Canton, 2007. "Redealing the Cards: How the Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies," Working Papers 2007.25, Fondazione Eni Enrico Mattei. [Downloadable!]
  5. Georgios E. Chortareas & Stephen M. Miller, 2000. "Optimal Central Banker Contracts and Common Agency," Working papers 2000-03, University of Connecticut, Department of Economics, revised Jun 2002. [Downloadable!]
    Other versions:
  6. Nicolas Marceau & Michael Smart, 2000. "Business Tax Lobbying," Cahiers de recherche CREFE / CREFE Working Papers 102, CREFE, Université du Québec à Montréal. [Downloadable!]
  7. Boerner, Kira, 2005. "Having Everyone in the Boat May Sink it - Interest Group Involvement and Policy Reforms," Discussion Papers in Economics 730, University of Munich, Department of Economics. [Downloadable!]
  8. Ngo Van Long & Antoine Soubeyran, 2003. "A Theory of Favoritism under International Oligopoly," CIRANO Working Papers 2003s-15, CIRANO. [Downloadable!]
  9. Richard T Boylan, 1998. "Corruption and staff expenditures in the U.S. Congress," Public Economics 9804002, EconWPA. [Downloadable!]
  10. Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2005. "Vote Buying," Others 0503006, EconWPA. [Downloadable!]
    Other versions:
    • Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2004. "Vote Buying," Discussion Papers 1386, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    • Jackson, Matthew O. & Dekel, Eddie & Wolinsky, Asher, 2005. "Vote buying," Working Papers 1215, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  11. Conconi, P., 2000. "Can Green Lobbies Replace a World Environmental Organization," The Warwick Economics Research Paper Series (TWERPS) 548, University of Warwick, Department of Economics. [Downloadable!]
  12. Börner, Kira, 2004. "Political Economy Reasons for Government Inertia: The Role of Interest Groups in the Case of Access to Medicines," Discussion Papers in Economics 313, University of Munich, Department of Economics. [Downloadable!]
  13. Marko Koethenbuerger, 2007. "Federal Tax-Transfer Policy and Intergovernmental Pre-Commitment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  14. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December. [Downloadable!] (restricted)
  15. Elhanan Helpman, 1995. "Politics and Trade Policy," NBER Working Papers 5309, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  16. Timothy J. Besley & Harvey S. Rosen, 1999. "Vertical Externalities in Tax Setting: Evidence from Gasoline and Cigarettes," NBER Working Papers 6517, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  17. repec:bep:eaptop:v:7:y:2007:i:1:p:1489-1489 is not listed on IDEAS
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