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Anti-lobbying gains from international agreements

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  • Maggi, Giovanni

Abstract

I argue that an important potential benefit of international agreements is to reduce wasteful rent-seeking activities by domestic and foreign special interest groups, through a reduction in policy discretion. The presence of foreign lobbying generates a novel type of international externality: by inviting wasteful rent-seeking by foreign lobbies, the presence of policy discretion itself generates a negative international externality. I examine the potential anti-lobbying effects of three salient types of international rules: exact policy commitments, policy bounds and non-discrimination rules. Unlike exact policy commitments, which remove policy discretion and hence shut down ex-post lobbying, policy bounds may invite ex-post lobbying and hence may forego part or all of the potential anti-lobbying gains. I also find that policy bounds may lead to mixed-strategy equilibria of the rent-seeking game. A non-discrimination rule can reduce rent-seeking by foreign lobbies, by injecting a free-rider problem in the strategic interaction between these lobbies, and under some conditions can achieve all the potential anti-foreign-lobbying gains.

Suggested Citation

  • Maggi, Giovanni, 2020. "Anti-lobbying gains from international agreements," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 20-34.
  • Handle: RePEc:eee:moneco:v:109:y:2020:i:c:p:20-34
    DOI: 10.1016/j.jmoneco.2019.10.010
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    2. Simon Hartmann & Thomas Lindner & Jakob Müllner & Jonas Puck, 2022. "Beyond the nation-state: Anchoring supranational institutions in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1282-1306, August.

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    Keywords

    Lobbying; International agreements;

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