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A Quantile-based Test of Protection for Sale Model

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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 organization. We use quantile and IV quantile regressions to do so using the data from Gawande and Bandyopadhyay (2000). Surprisingly, the results do not provide any evidence favoring the PFS model. We also explain why previous work may have inadvertently found support for it.

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File URL: http://www.uts.edu.au/sites/default/files/edg_wp12.pdf
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Bibliographic Info

Paper provided by Economics Discipline Group, UTS Business School, University of Technology, Sydney in its series Working Paper Series with number 12.

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Length: 51
Date of creation: 01 Jun 2013
Date of revision:
Handle: RePEc:uts:ecowps:12

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Keywords: Protection for Sale; Lobbying; Political Economy; Quantile Regression;

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References

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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. Susumu Imai & Hajime Katayama & Kala Krishna, 2006. "Protection for Sale or Surge Protection?," NBER Working Papers 12258, National Bureau of Economic Research, Inc.
  3. Xenia Matschke, 2005. "Costly Revenue-Raising and the Case for Favoring Import-Competing Industries," CESifo Working Paper Series 1502, CESifo Group Munich.
  4. 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.
  5. Chernozhukov, Victor & Hansen, Christian, 2006. "Instrumental quantile regression inference for structural and treatment effect models," Journal of Econometrics, Elsevier, vol. 132(2), pages 491-525, June.
  6. Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
  7. Josh Ederington & Jenny Minier, 2008. "Reconsidering the empirical evidence on the Grossman-Helpman model of endogenous protection," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 501-516, May.
  8. Susumu Imai & Hajime Katayama & Kala Krishna, 2010. "A Quantile-based Test of Protection for Sale Model," Global COE Hi-Stat Discussion Paper Series gd10-140, Institute of Economic Research, Hitotsubashi University.
  9. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  10. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, 01.
  11. 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.
  12. Bombardini, Matilde, 2008. "Firm heterogeneity and lobby participation," Journal of International Economics, Elsevier, vol. 75(2), pages 329-348, July.
  13. Phillip McCalman, 2004. "Protection for Sale and Trade Liberalization: an Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 81-94, 02.
  14. 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.
  15. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  16. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
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Cited by:
  1. 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, vol. 18(2), pages 181-191, March.
  2. Susumu Imai & Hajime Katayama & Kala Krishna, 2007. "A Quantile Based Test of Protection for Sale Model," Working Papers 1132, Queen's University, Department of Economics.
  3. Susumu Imai & Hajime Katayama & Kala Krishna, 2006. "Protection for Sale or Surge Protection?," Working Papers 1114, Queen's University, Department of Economics.
  4. repec:hal:journl:halshs-00331298 is not listed on IDEAS
  5. repec:hal:cesptp:halshs-00282331 is not listed on IDEAS
  6. repec:hal:cesptp:halshs-00331298 is not listed on IDEAS
  7. repec:hal:journl:halshs-00282331 is not listed on IDEAS

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