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To Ban or Not to Ban: Foreign Lobbying and Cross National Externalities

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  • Toke Aidt
  • Uk Hwang
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    Abstract

    This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize cross national externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation.

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    File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/cwpe1402.pdf
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    Bibliographic Info

    Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1402.

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    Date of creation: 10 Jan 2014
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    Handle: RePEc:cam:camdae:1402

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    Web page: http://www.econ.cam.ac.uk/index.htm

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    1. Giovanni Facchini & Johannes Van Biesebroeck & Gerald Willmann, 2005. "Protection for Sale with Imperfect Rent Capturing," NBER Working Papers 11269, National Bureau of Economic Research, Inc.
    2. Kee, Hiau Looi & Olarreaga, Marcelo & Silva, Peri, 2007. "Market access for sale," Journal of Development Economics, Elsevier, vol. 82(1), pages 79-94, January.
    3. Toke S. Aidt & Uk Hwang, 2008. "On the Internalization of Cross-National Externalities through Political Markets: The Case of Labour Standards," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 509-533, September.
    4. Paola Conconi, 2003. "Green Lobbies and Transboundary Pollution in Large Open Economies," ULB Institutional Repository 2013/5837, ULB -- Universite Libre de Bruxelles.
    5. Per Fredriksson & Daniel Millimet, 2007. "Legislative Organization and Pollution Taxation," Public Choice, Springer, vol. 131(1), pages 217-242, April.
    6. Aidt, Toke S. & Albornoz, Facundo, 2011. "Political regimes and foreign intervention," Journal of Development Economics, Elsevier, vol. 94(2), pages 192-201, March.
    7. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
    8. Roberto Bonfatti, 2011. "An Economic Theory of Foreign Interventions and Regime Change," CESifo Working Paper Series 3475, CESifo Group Munich.
    9. Larry Qiu, 2004. "Lobbying, multisector trade, and sustainability of free-trade agreements," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 1061-1083, November.
    10. Damania, Richard & Fredriksson, Per G., 2007. "Trade policy: What's welfare got to do with it?," Economics Letters, Elsevier, vol. 96(1), pages 64-69, July.
    11. Steven Husted, 1991. "Foreign Lobbying: A Theoretical Analysis," Eastern Economic Journal, Eastern Economic Association, vol. 17(1), pages 89-99, Jan-Mar.
    12. Hotte, Louis & Winer, Stanley L., 2012. "Environmental regulation and trade openness in the presence of private mitigation," Journal of Development Economics, Elsevier, vol. 97(1), pages 46-57.
    13. Facundo Albornoz & Sebastian Galiani & Daniel Heymann, 2012. "Foreign investment and expropriation under oligarchy and democracy," Economics and Politics, Wiley Blackwell, vol. 24(1), pages 24-46, 03.
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