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


  • Stoyanov, Andrey


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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    References listed on IDEAS

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    11. Bekker, Paul A, 1994. "Alternative Approximations to the Distributions of Instrumental Variable Estimators," Econometrica, Econometric Society, vol. 62(3), pages 657-681, May.
    12. repec:cup:apsrev:v:94:y:2000:i:04:p:891-903_22 is not listed on IDEAS
    13. Richardson, Martin, 1993. "Endogenous protection and trade diversion," Journal of International Economics, Elsevier, vol. 34(3-4), pages 309-324, May.
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    Cited by:

    1. Huang, Haifang & Pang, Ke & Tang, Yao, 2013. "The Effects of Exchange Rates on Employment in Canada," Working Papers 2013-8, University of Alberta, Department of Economics, revised 30 Apr 2014.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Joseph Mai & Andrey Stoyanov, 2015. "The effect of the Canada-US Free Trade Agreement on Canadian multilateral trade liberalization," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 1067-1098, August.
    7. 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.
    8. Andrey Stoyanov, 2014. "Endogenous Free Trade Agreements and Foreign Lobbying," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 561-577, August.
    9. 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.
    10. Bandyopadhyay, Subhayu & Lahiri, Sajal, 2012. "Possible Unintended Effects of Restrictions on Foreign Lobbying in a Customs Union," Working Papers 2012-061, Federal Reserve Bank of St. Louis, revised 06 May 2016.
    11. 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.
    12. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.
    13. Mai, Joseph & Stoyanov, Andrey, 2018. "Tariff Cooperation in Free Trade Areas," MPRA Paper 84398, University Library of Munich, Germany.
    14. 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.
    15. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, Elsevier.
    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. repec:eee:reveco:v:50:y:2017:i:c:p:98-105 is not listed on IDEAS


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