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Live or let die : intra-sectoral lobbying on entry

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Author Info
Vincent Rebeyrol () (Centre d'Economie de la Sorbonne et Paris School of Economics)
Julien Vauday () (Centre d'Economie de la Sorbonne et Paris School of Economics)

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Abstract

Since the GATT/WTO hinders tariffs manipulation, the Technical Barriers to Trade (TBT's) are a growing and appealing protection tool. The endogenous protection literature has shown that a government's taste for protection creates an incentive for lobbying. Since regulations at the origin of such barriers have to be borne also by domestic sectors, due to the National Treatment WTO's principle, this creates conflicts of interests within a sector enhancing an intra-sectoral competition. This paper develops a political economy framework based on common agency under complete information that highlights this issue. The political competition opposes productive versus non productive firms in this context rather than domestic versus foreign ones, contrasting with the literature. Some apparently unorganized sectors, i.e. that are not protected, may actually be sectors where lobbies are biased towards non productive firms. Therefore, we should be cautious when empirically studying the relationship between the levels of protection and contributions.

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Publisher Info
Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number bla08036.

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Length: 35 pages
Date of creation: May 2008
Date of revision:
Handle: RePEc:mse:cesdoc:bla08036

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Web page: http://ces.univ-paris1.fr/
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Related research
Keywords: Endogenous protection; Truthful equilibrium; firm heterogeneity.;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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This page was last updated on 2009-11-23.


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