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Trade policy of a free trade agreement in the presence of foreign lobbying

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  • Stoyanov, Andrey

Abstract

This paper studies the effect of foreign lobbies on trade policy of a country which is a member of a Free Trade Agreement (FTA). It uses a monopolistically competitive political economy model in which the government determines external tariffs endogenously. The effect of foreign lobbying under the FTA is examined empirically using Canadian industry-level trade data that allow differentiating of lobby groups by the country of origin. The analysis suggests that the presence of foreign lobbying has a significant effect on the domestic trade policy. The heterogeneity of foreign lobbies is also important: the presence of an organized lobbying group in an FTA partner country tends to raise trade barriers while an organized lobbying group of exporters from outside of the FTA is associated with less protection.

Suggested Citation

  • Stoyanov, Andrey, 2009. "Trade policy of a free trade agreement in the presence of foreign lobbying," Journal of International Economics, Elsevier, vol. 77(1), pages 37-49, February.
  • Handle: RePEc:eee:inecon:v:77:y:2009:i:1:p:37-49
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    Cited by:

    1. Cai, Dapeng & Jørgensen, Jan Guldager, 2017. "Mutual Recognition for Sale: International Bargaining over Product Standards," Discussion Papers of Business and Economics 1/2017, University of Southern Denmark, Department of Business and Economics.
    2. Ando, Mitsuyo & Estevadeordal, Antoni & Volpe Martincus, Christian, 2009. "Complements or Substitutes? Preferential and Multilateral Trade Liberalization at the Sectoral Level," Working Papers on Regional Economic Integration 39, Asian Development Bank.
    3. Andrey Stoyanov, 2016. "Regional Trade Agreements and Cross-border Lobbying: Empirical Evidence from the Canada–US Free Trade Agreement Negotiations," Review of International Economics, Wiley Blackwell, vol. 24(1), pages 126-149, February.
    4. Matilde Bombardini & Francesco Trebbi, 2019. "Empirical Models of Lobbying," NBER Working Papers 26287, National Bureau of Economic Research, Inc.
    5. Andrey Stoyanov, 2014. "Endogenous Free Trade Agreements and Foreign Lobbying," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 561-577, August.
    6. Kim, Young-Han & Kim, Sang-Kee, 2012. "Welfare effects of competitive lobbying efforts in international oligopoly markets," Economic Modelling, Elsevier, vol. 29(3), pages 614-620.
    7. Dapeng Cai & Jie Li, 2018. "North–South Negotiations on Emission Reductions: A Bargaining Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(1), pages 157-177, September.
    8. Jie Li & Xiaohui Xu & Jing Lu, 2015. "Negotiation over Intellectual Property Rights Protection in a Mixed Market," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 759-775, November.
    9. Polk, Andreas & Schmutzler, Armin & Müller, Adrian, 2014. "Lobbying and the power of multinational firms," European Journal of Political Economy, Elsevier, vol. 36(C), pages 209-227.
    10. Haifang Huang & Ke Pang & Yao Tang, 2014. "Effects of Exchange Rates on Employment in Canada," Canadian Public Policy, University of Toronto Press, vol. 40(4), pages 339-352, December.
    11. Antoni Estevadeordal & Christian Volpe Martincus & Mitsuyo Ando, 2009. "Complements or Substitutes?: Preferential and Multilateral Trade Liberalization at the Sectoral Level," IDB Publications (Working Papers) 9332, Inter-American Development Bank.
    12. Dapeng Cai & Jie Li, 2012. "Quid pro quo and the enforcement of intellectual property rights protection: A bargaining approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(6), pages 755-772, December.
    13. Joseph Mai & Andrey Stoyanov, 2015. "The effect of the Canada‐US Free Trade Agreement on Canadian multilateral trade liberalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(3), pages 1067-1098, August.
    14. Stoyanov, Andrey & Yildiz, Halis Murat, 2015. "Preferential versus multilateral trade liberalization and the role of political economy," European Economic Review, Elsevier, vol. 80(C), pages 140-164.
    15. Qasim, Ahmed Waqar & Itaya, Jun-ichi, 2019. "Trade Policy with Intermediate Inputs Trade," Discussion paper series. A 342, Graduate School of Economics and Business Administration, Hokkaido University.
    16. Subhayu Bandyopadhyay & Sajal Lahiri & Howard J. Wall, 2009. "Cross-border lobbying in preferential trading agreements: implications for external tariffs," Working Papers 2009-041, Federal Reserve Bank of St. Louis.
    17. Subhayu Bandyopadhyay & Sajal Lahiri, 2012. "Possible Unintended Effects of Restrictions on Foreign Lobbying in a Customs Union," Working Papers 2012-061, Federal Reserve Bank of St. Louis.
    18. Niels Anger & Emmanuel Asane-Otoo & Christoph Böhringer & Ulrich Oberndorfer, 2016. "Public interest versus interest groups: a political economy analysis of allowance allocation under the EU emissions trading scheme," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(5), pages 621-638, October.
    19. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.
    20. Mai, Joseph & Stoyanov, Andrey, 2018. "Tariff Cooperation in Free Trade Areas," MPRA Paper 84398, University Library of Munich, Germany.
    21. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 317-390, Elsevier.
    22. Annicchiarico, Barbara & Marvasi, Enrico, 2019. "Protection for sale under monopolistic competition: Beyond the CES," European Journal of Political Economy, Elsevier, vol. 60(C).
    23. Maggi, Giovanni, 2020. "Anti-lobbying gains from international agreements," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 20-34.
    24. Bandyopadhyay, Subhayu & Lahiri, Sajal, 2017. "Lobbying for a Common External Tariff from inside and out," International Review of Economics & Finance, Elsevier, vol. 50(C), pages 98-105.

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