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A Quantile-based Test of Protection for Sale Model

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  • Susumu Imai
  • Hajime Katayama
  • Kala Krishna

Abstract

This paper proposes a new test of the Protection for Sale (PFS) model by Grossman and Helpman (1994). Unlike existing methods in the literature, our approach does not require any data on political organizations. We formally show that the PFS model predicts that the quantile regression of the protection measure on the inverse import penetration ratio divided by the import demand elasticity, should yield a positive coefficient for quantiles close to one. We test this prediction using the data from Gawande and Bandyopadhyay (2000). The results do not provide any evidence favoring the PFS model.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13900.

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Date of creation: Mar 2008
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Publication status: published as Journal of International Economics Volume 91, Issue 1, September 2013, Pages 40–52
Handle: RePEc:nbr:nberwo:13900

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References

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  1. Xenia Matschke, 2005. "Costly Revenue-Raising and the Case for Favoring Import-Competing Industries," Working papers, University of Connecticut, Department of Economics 2005-28, University of Connecticut, Department of Economics, revised Apr 2007.
  2. Facchini, Giovanni & van Biesebroeck, Johannes & Willmann, Gerald, 2003. "Protection for Sale with Imperfect Rent Capturing," Economics Working Papers 2004,01, Christian-Albrechts-University of Kiel, Department of Economics.
  3. Susumu Imai & Hajime Katayama & Kala Krishna, 2006. "Protection for Sale or Surge Protection?," Working Papers, Queen's University, Department of Economics 1114, Queen's University, Department of Economics.
  4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 833-50, September.
  5. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, Econometric Society, vol. 73(1), pages 245-261, 01.
  6. Susumu Imai & Hajime Katayama & Kala Krishna, 2013. "A Quantile-based Test of Protection for Sale Model," Working Paper Series, Economics Discipline Group, UTS Business School, University of Technology, Sydney 12, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
  7. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
  8. Josh Ederington & Jenny Minier, 2008. "Reconsidering the empirical evidence on the Grossman-Helpman model of endogenous protection," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 41(2), pages 501-516, May.
  9. Victor Chernozhukov & Christian Hansen, 2004. "The Effects of 401(K) Participation on the Wealth Distribution: An Instrumental Quantile Regression Analysis," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 735-751, August.
  10. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, American Economic Association, vol. 89(5), pages 1116-1134, December.
  11. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 33-50, January.
  12. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  13. Chernozhukov, Victor & Hansen, Christian, 2006. "Instrumental quantile regression inference for structural and treatment effect models," Journal of Econometrics, Elsevier, Elsevier, vol. 132(2), pages 491-525, June.
  14. Phillip McCalman, 2004. "Protection for Sale and Trade Liberalization: an Empirical Investigation," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 12(1), pages 81-94, 02.
  15. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoglu, 2002. ""Protection For Sale" In A Developing Country: Democracy Vs. Dictatorship," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 497-508, August.
  16. Bombardini, Matilde, 2008. "Firm heterogeneity and lobby participation," Journal of International Economics, Elsevier, Elsevier, vol. 75(2), pages 329-348, July.
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Citations

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Cited by:
  1. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2010. "A Quantile-based Test of Protection for Sale Model," CCES Discussion Paper Series, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University 34, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  2. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Is protection really for sale? A survey and directions for future research," International Review of Economics & Finance, Elsevier, Elsevier, vol. 18(2), pages 181-191, March.
  3. Susumu Imai & Hajime Katayama & Kala Krishna, 2006. "Protection for Sale or Surge Protection?," NBER Working Papers 12258, National Bureau of Economic Research, Inc.
  4. Vincent Rebeyrol & Julien Vauday, 2008. "Live or let die : intra-sectoral lobbying on entry," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00282331, HAL.
  5. repec:hal:journl:halshs-00282331 is not listed on IDEAS
  6. Julien Vauday, 2008. "Heterogeneous Lobbying Efficiency," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00331298, HAL.
  7. repec:hal:journl:halshs-00331298 is not listed on IDEAS

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