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Protection for sale without aggregation bias

Author

Listed:
  • Solleder, Jean-Marc
  • Silvy, Fulvio
  • Olarreaga, Marcelo

Abstract

Estimates of Grossman and Helpman (1994) Protection For Sale (PFS) model yield unrealistically high estimates of the weight governments put on social welfare relative to lobbying contributions. Estimates of the former are often close to 1. We argue this is due to the level of aggregation at which the model is estimated. While protection is determined at the tariff line level, production data are only available at the industry level. Using a new production dataset at the tariff level, our estimates show that the average weight on social welfare in a sample of 142 countries declines by 77 percent.

Suggested Citation

  • Solleder, Jean-Marc & Silvy, Fulvio & Olarreaga, Marcelo, 2026. "Protection for sale without aggregation bias," Journal of International Economics, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:inecon:v:160:y:2026:i:c:s0022199626000127
    DOI: 10.1016/j.jinteco.2026.104222
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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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