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To Ban or Not to Ban: Foreign Lobbying and Cross-National Externalities

Author

Listed:
  • Toke S. Aidt
  • Uk Hwang

Abstract

This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize crossnational externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation.

Suggested Citation

  • Toke S. Aidt & Uk Hwang, 2014. "To Ban or Not to Ban: Foreign Lobbying and Cross-National Externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 272-297, February.
    • Handle: RePEc:cje:issued:v:47:y:2014:i:1:p:272-297
    DOI: 10.1111/caje.12074
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    Cited by:

    1. Achim Hagen & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2021. "National political pressure groups and the stability of international environmental agreements," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(3), pages 405-425, September.
    2. Zachary Cohle, 2026. "Lobbying for IPR-Protection in North-South Trade with R&D Offshoring," Open Economies Review, Springer, vol. 37(1), pages 115-136, March.
    3. Mathilde Lebrand, 2016. "Profit Shifting and FDI Restrictions," CESifo Working Paper Series 5885, CESifo.
    4. Bandyopadhyay, Subhayu & Sandler, Todd, 2023. "Politically influenced counterterrorism policy and welfare efficiency," European Journal of Political Economy, Elsevier, vol. 76(C).
    5. Thomas Groll & Anja Prummer, 2016. "Whom to Lobby? Targeting in Political Networks," Working Papers 808, Queen Mary University of London, School of Economics and Finance.
    6. Aidt, Toke S. & Albornoz, Facundo & Gassebner, Martin, 2018. "The golden hello and political transitions," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 157-173.
    7. Bontems, Philippe & Cheikbossian, Guillaume & Hafidi, Houda, 2024. "Environmental Tax Competition and Welfare: The Good News about Lobbies," TSE Working Papers 24-1551, Toulouse School of Economics (TSE).
    8. Yu, Ping, 2020. "Carbon tax/subsidy policy choice and its effects in the presence of interest groups," Energy Policy, Elsevier, vol. 147(C).
    9. Fünfgelt, Joachim & Schulze, Günther G., 2016. "Endogenous environmental policy for small open economies with transboundary pollution," Economic Modelling, Elsevier, vol. 57(C), pages 294-310.
    10. Aidt, Toke S. & Albornoz, Facundo & Hauk, Esther, 2024. "To cut or not to cut: Deforestation policy under the shadow of foreign influence," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    11. Fink, Alexander & Stahl, Jörg R., 2020. "The value of international political connections: Evidence from Trump's 2016 surprise election," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 691-700.
    12. Philippe Bontems & Guillaume Cheikbossian & Houda Hafidi, 2025. "Environmental tax competition and welfare: the good news about lobbies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 65(1), pages 27-68, August.
    13. Thomas Groll & Anja Prummer, 2016. "Whom to Lobby? Targeting in Political Networks," Working Papers 808, Queen Mary University of London, School of Economics and Finance.
    14. Pierre Fauvet & Sébastien Rouillon, 2016. "Would you trust lobbies?," Public Choice, Springer, vol. 167(3), pages 201-219, June.
    15. Achim Hagen & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2016. "The Influence of Political Pressure Groups on the Stability of International Environmental Agreements," Working Papers V-391-16, University of Oldenburg, Department of Economics, revised Aug 2016.
    16. Ahmed Waqar Qasim & Jun-ichi Itaya, 2019. "Heterogeneous Firms and Lobby Participation Decision," Economics Bulletin, AccessEcon, vol. 39(4), pages 2415-2422.
    17. Philippe Bontems & Guillaume Cheikbossian & Houda Hafidi, 2025. "Environmental Tax Competition and Welfare: The Good News about Lobbies," Post-Print hal-04712652, HAL.
    18. Yu-Bong Lai, 2016. "Does Tax Competition Reduce Corruption?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(4), pages 331-356, September.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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