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Politically Imposed Entry Barriers

  • Paul H. Rubin

    (Emory University)

  • Mark A. Cohen

    (Vanderbilt University)

The antitrust agencies analyze consequences of proposed mergers assuming that imports are constrained by existing quotas, a second-best approach. This policy is flawed. Quotas are endogenous. If a merger allows firms to reduce output, the quota will be increased. If an industry has sufficient political power to obtain subsidies from government then the authorities should assume that these subsidies will be reduced if market power increases. Paradoxically, for political entry barriers truly in the public interest, the antitrust authorities should take the barrier as given. We provide evidence of a large adjustment of tariffs to changes in market power.

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File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume18/V18N3P333_344.pdf
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Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 18 (1992)
Issue (Month): 3 (Summer)
Pages: 333-344

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Handle: RePEc:eej:eeconj:v:18:y:1992:i:3:p:333-344
Contact details of provider: Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
Phone: (201) 684-7346
Web page: http://www.ramapo.edu/eea/journal.html
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  1. Noam, Eli, 1984. "Market Power and Regulation: A Simultaneous Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 32(3), pages 335-47, March.
  2. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
  3. William M. Landes & Richard A. Posner, 1975. "The Independent Judiciary in an Interest-Group Perspective," NBER Working Papers 0110, National Bureau of Economic Research, Inc.
  4. Hazlett, Thomas W, 1992. "The Legislative History of the Sherman Act Re-examined," Economic Inquiry, Western Economic Association International, vol. 30(2), pages 263-76, April.
  5. Faith, Roger L & Leavens, Donald R & Tollison, Robert D, 1982. "Antitrust Pork Barrel," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 329-42, October.
  6. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  7. Buchanan, James M & Lee, Dwight R, 1992. "Private Interest Support for Efficiency Enhancing Antitrust Policies," Economic Inquiry, Western Economic Association International, vol. 30(2), pages 218-24, April.
  8. McKee, Michael & West, Edwin G, 1981. "The Theory of Second Best: A Solution in Search of a Problem," Economic Inquiry, Western Economic Association International, vol. 19(3), pages 436-48, July.
  9. Godek, Paul E, 1985. "Industry Structure and Redistribution through Trade Restrictions," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 687-703, October.
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