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A Theory of Favoritism under International Oligopoly

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Author Info
Ngo Van Long ()
Antoine Soubeyran

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Abstract

This paper offers an explanation of the fact that some foreign firms are favored at the expense of others, and characterizes the distribution of favors in terms of the cost parameters of firms, and a preference parameter in the government's objective function. We present a model where favors must be bought: they come from competing contributions. This model is compared with a benchmark model with a benevolent government. We show how the distribution of favors in the favor-seeking model deviates from the distribution that would be obtained if the government were really benevolent.

On offre une explication du fait que certaines firmes étrangères sont mieux traitées que d'autres. On caractérise la distribution des faveurs qui sont associées à l'asymétrie des coûts. On modélise la situation où les faveurs sont achetées. On compare ce modèle de la recherche des rentes au modèle standard où le gouvernement maximise le bien-être social. On caractérise la différence entre les distributions des faveurs de ces deux modèles.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2003s-15.

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Date of creation: 01 Apr 2003
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Handle: RePEc:cir:cirwor:2003s-15

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Related research
Keywords: Favoritism; Asymmetric Oligopoly; Cost Manipulation; Discriminatory Taxes; Favoritisme; oligopole asymétrique; manipulation de coûts; taxes discriminatoires;

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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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. Long, N.V. & Soubeyran, A., 1998. "International Cross Ownership And Strategic Trade Policies," G.R.E.Q.A.M. 98a21, Universite Aix-Marseille III.
    Other versions:
  2. David R. Collie, 2006. "Tariffs And Subsidies Under Asymmetric Oligopoly: Ad Valorem Versus Specific Instruments," Manchester School, University of Manchester, vol. 74(3), pages 314-333, 06. [Downloadable!] (restricted)
  3. Leahy, D. & Montagna, C., 1997. "Strategic Trade Policy With Domestic Cost Asymmetries," Papers 97/27, College Dublin, Department of Political Economy-.
  4. Long, Ngo Van & Soubeyran, Antoine, 2001. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 505-33, May.
    Other versions:
  5. 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:
  6. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February. [Downloadable!] (restricted)
  7. Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, vol. 78(4), pages 719-45, September.
  8. Ted Bergstrom & Hal Varian, 1985. "Two Remarks on Cournot Equilibria," University of California at Santa Barbara, Economics Working Paper Series 1985C, Department of Economics, UC Santa Barbara. [Downloadable!]
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  9. Long, Ngo Van & Soubeyran, Antoine, 1996. "Lobbying for protection by heterogeneous firms," European Journal of Political Economy, Elsevier, vol. 12(1), pages 19-32, April. [Downloadable!] (restricted)
  10. Long, N.V. & Soubeyran, A. & Hillman, A., 1998. "Protection, Lobbying, and Market Structure," G.R.E.Q.A.M. 98a24, Universite Aix-Marseille III.
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  11. Van Long, Ngo & Soubeyran, Antoine, 2000. "Existence and uniqueness of Cournot equilibrium: a contraction mapping approach," Economics Letters, Elsevier, vol. 67(3), pages 345-348, June. [Downloadable!] (restricted)
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  12. Avinash Dixit, 1996. "Special-Interest Lobbying and Endogenous Commodity Taxation," Eastern Economic Journal, Eastern Economic Association, vol. 22(4), pages 375-388, Fall. [Downloadable!]
  13. Long, N.V. & Soubeyran, A., 1998. "Cost Manipulation in an Asymmetric Oligopoly: The Taxation Problem," G.R.E.Q.A.M. 98a25, Universite Aix-Marseille III.
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  14. Rodrik, Dani, 1989. "Optimal trade taxes for a large country with non-atomistic firms," Journal of International Economics, Elsevier, vol. 26(1-2), pages 157-167, February. [Downloadable!] (restricted)
  15. Ngo, Van Long & Soubeyran, Antoine, 1997. "Cost heterogeneity, industry concentration and strategic trade policies," Journal of International Economics, Elsevier, vol. 43(1-2), pages 207-220, August. [Downloadable!] (restricted)
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  16. Neary, J Peter, 1991. "Cost Asymmetries in International Subsidy Games: Should Governments Help Winners or Losers?," CEPR Discussion Papers 560, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  17. Van Long, Ngo & Vousden, Neil, 1991. "Protectionist responses and declining industries," Journal of International Economics, Elsevier, vol. 30(1-2), pages 87-103, February. [Downloadable!] (restricted)
  18. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February. [Downloadable!] (restricted)
    Other versions:
  19. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February. [Downloadable!] (restricted)
  20. Collie, David, 1993. "Strategic trade policy under asymmetric oligopoly," European Journal of Political Economy, Elsevier, vol. 9(2), pages 275-280, May. [Downloadable!] (restricted)
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