Advanced Search
MyIDEAS: Login to save this paper or follow this series

Endogenous number of lobby groups in a specific factor trade model

Contents:

Author Info

  • Marcel Vaillant

    (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

The basic goal of this paper is to develop an endogenous trade policy model in the Grossman and Helpman (1994) tradition that could endogenise the number of lobby groups in the economy. The game has three stages. In the first stage, the consumer that owns a specific factor decides whether to organise or not in pressure groups. In the second one, the lobbies (organised groups of consumers) select the contributions (income transfers) they are willing to make to influence the government's actions. Finally, in a third stage of the game the government establishes the trade policy. This chapter highlights two main results. The first one is that contribution is a dominant strategy for each lobby group, thus the sub-game perfect equilibrium implies all the lobby groups being active (L=N). The second one is related with the welfare evaluation of this equilibrium. It is well known in the literature that this equilibrium is efficient (in a Pareto sense) but it is also important to analyse what happen when only the lobby welfare is considered. The conclusion is that being organised and defending a particular interest is better than not being organised, given that the others are not organised (or only some are), because it is possible to obtain an advantage in the political relationship with the government. On the other hand, since the other antagonic groups (one or some) are organised in lobbies, it is possible to reduce the damage from the distortions created by their influence on the government’s actions. An implication of this result is that many times in societies with a multiplicity of specific interests organised corporately, typically all finish in a worst situation than if they were not organised, arriving to a prisoner's dilemma outcome, if only the lobby’s welfare is considered.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://decon.edu.uy/publica/1998/Doc0198.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Department of Economics - dECON in its series Documentos de Trabajo (working papers) with number 0198.

as in new window
Length: 26 pages
Date of creation: Sep 1998
Date of revision:
Handle: RePEc:ude:wpaper:0198

Contact details of provider:
Postal: Constituyente 1502, 6to piso, CP 11200, Montevideo
Phone: (598) 2410-6449
Fax: (598) 2410-6450
Email:
Web page: http://www.fcs.edu.uy/subcategoria.php?SubCatId=48&CatId=53
More information through EDIRC

Related research

Keywords:

References

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.:
as in new window
  1. Dexit, A. & Grossman, G.M. & Helpman, E., 1996. "Common Agency and Coordination: General Theory and Application to Tax Policy," Papers 11-96, Tel Aviv.
  2. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
  3. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
  4. Dani Rodrik, 1994. "What Does the Political Economy Literature on Trade Policy (Not) Tell UsThat We Ought To Know?," NBER Working Papers 4870, National Bureau of Economic Research, Inc.
  5. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-42, July.
  6. Brainard, S. Lael & Verdier, Thierry, 1997. "The political economy of declining industries: Senescent industry collapse revisited," Journal of International Economics, Elsevier, vol. 42(1-2), pages 221-237, February.
  7. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  8. Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
  9. Gabriel Sánchez, 1998. "Lobbying, innovation and protectionist cycles," Economics Working Papers 272, Department of Economics and Business, Universitat Pompeu Fabra.
  10. 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.
  11. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  12. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December.
  13. Tharakan, P K M, 1995. "Political Economy and Contingent Protection," Economic Journal, Royal Economic Society, vol. 105(433), pages 1550-64, November.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ude:wpaper:0198. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Irene Musio) or (Héctor Pastori).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.