The Complementarity Between Endogenous Protection And Direct Foreign Investment
This paper studies the endogenous relationship between direct foreign investgment (DFI) and trade restriction. A domestic labor union interested in both employment and wages bargains with a foreign firm and lobbies against foreign imports. By endogeneizing the wage rate and incorporating resource-using lobbying, we show that more DFI results in higher lobbying efforts and lower imports under fairly general conditions, i.e. a reversal of quid pro quo DFI. We also conduct comparative statics analysis on wages and lobbying efforts. Copyright 1996 Blackwell Publishers Ltd..
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Volume (Year): 8 (1996)
Issue (Month): 1 (March)
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