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A Comparison of Optimal Tariffs and Welfare under No Lobbying, Domestic Lobbying and Domestic-foreign Lobbying

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  • Xianhai Huang
  • Mobing Jiang
  • Jie Li

Abstract

type="main" xml:id="twec12251-abs-0001"> Whether and what type of the lobbying-induced trade policies can improve the domestic welfare? We show that as compared to the case of no lobbying and the case of domestic lobbying, the domestic-foreign lobbying may achieve the lowest tariff and may also realise the highest welfare for the domestic country. Our finding provides a theoretical explanation to the prevalent lobbying competition between Asian firms and US firms in USA recently. We argue that the domestic-foreign lobbying may contribute to a freer trade in the domestic country, and lobbying competition may be one of the strongest forces pushing for trade liberalisation.

Suggested Citation

  • Xianhai Huang & Mobing Jiang & Jie Li, 2015. "A Comparison of Optimal Tariffs and Welfare under No Lobbying, Domestic Lobbying and Domestic-foreign Lobbying," The World Economy, Wiley Blackwell, vol. 38(1), pages 136-150, January.
    • Handle: RePEc:bla:worlde:v:38:y:2015:i:1:p:136-150
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    File URL: http://hdl.handle.net/10.1111/twec.2015.38.issue-1
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