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Information and Legislative Bargaining: The Political Economy of U.S. Tariff Suspensions

Author

Listed:
  • Rodney D. Ludema

    (Georgetown University)

  • Anna Maria Mayda

    (Georgetown University and CEPR)

  • Prachi Mishra

    (Reserve Bank of India and International Monetary Fund)

Abstract

This paper studies the political influence of individual firms on congressional decisions to suspend tariffs on U.S. imports of intermediate goods. We develop a legislative bargaining model in which firms influence legislators by transmitting information about the value of protection, using verbal messages and lobbying expenditures. Model estimation using firmlevel data on tariff suspension bills and lobbying expenditures reveals that the probability a suspension is granted decreases with each additional firm that expresses opposition. This effect is significantly larger than that of either opponent or proponent lobbying due to the greater information content of verbal opposition and legislative bargaining costs.

Suggested Citation

  • Rodney D. Ludema & Anna Maria Mayda & Prachi Mishra, 2018. "Information and Legislative Bargaining: The Political Economy of U.S. Tariff Suspensions," The Review of Economics and Statistics, MIT Press, vol. 100(2), pages 303-318, May.
    • Handle: RePEc:tpr:restat:v:100:y:2018:i:2:p:303-318
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    Citations

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    Cited by:

    1. Chad Brown & Paola Conconi & Aksel Erbahar & Lorenzo Trimarchi, 2020. "Trade Protection Along Supply Chains," Working Papers ECARES 2020-52, ULB -- Universite Libre de Bruxelles.
    2. Ludema, Rodney D. & Mayda, Anna Maria & Yu, Zhi & Yu, Miaojie, 2021. "The political economy of protection in GVCs: Evidence from Chinese micro data," Journal of International Economics, Elsevier, vol. 131(C).
    3. Lake, James & Nie, Jun, 2023. "The 2020 US Presidential election and Trump’s wars on trade and health insurance," European Journal of Political Economy, Elsevier, vol. 78(C).
    4. Stefano Barbieri & Kai A. Konrad & David A. Malueg, 2020. "Preemption contests between groups," RAND Journal of Economics, RAND Corporation, vol. 51(3), pages 934-961, September.
    5. Bown, Chad P. & Erbahar, Aksel & Zanardi, Maurizio, 2021. "Global value chains and the removal of trade protection," European Economic Review, Elsevier, vol. 140(C).
    6. Shang, Longfei & Lin, Ji-Chai & Saffar, Walid, 2021. "Does economic policy uncertainty drive the initiation of corporate lobbying?," Journal of Corporate Finance, Elsevier, vol. 70(C).
    7. Michael‐David Mangini, 2023. "Escape from tariffs: The political economies of protection and classification," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 773-805, November.
    8. James Lake & Jun Nie, 2022. "The 2020 US Presidential Election and Trump's Trade War," CESifo Working Paper Series 9669, CESifo.
    9. Matthew Grant, 2020. "Why Special Economic Zones? Using Trade Policy to Discriminate across Importers," American Economic Review, American Economic Association, vol. 110(5), pages 1540-1571, May.
    10. Maggi, Giovanni, 2020. "Anti-lobbying gains from international agreements," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 20-34.
    11. Conconi, Paola & Blanga-Gubbay, Michael & Parenti, Mathieu, 2020. "Lobbying for Globalization," CEPR Discussion Papers 14597, C.E.P.R. Discussion Papers.

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