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Endogenous Tariffs in a Common-Agency Model: A New Empirical Approach Applied to India

Author

Listed:
  • Olivier Cadot

    (HEC Lausanne (Lausanne, Switzerland). Centre d'études et de Recherches sur le Développement International (Clermont Ferrand, France). Centre for Economic Policy Research (London, England))

  • Laure Dutoit

    (United Nations, Economic Commission for Latin America and the Caribbean (Santiago, Chile))

  • Jean Marie Grether

    (Universite de Neuchâtel (Neuchâtel, Switzerland))

  • Marcelo Olarreaga

    (University of Geneva (Geneve, Switzerland). Centre for Economic Policy Research (London, England))

Abstract

This paper proposes a new method to test the Grossman-Helpman model of endogenous protection and lobby formation, which does not require data on lobby formation or contributions. It identifies politically organized industries using commonly available trade and production data, as well as the model's structural parameter estimates. Applied to India, it yields results that are qualitatively consistent with the model's predictions and that seem quantitatively more plausible than estimates given for the US by alternative methods. Our estimates imply that the weight put by the Indian government on contributions by politically organized sectors is a third of the weight it puts on (gross) social welfare, well above existing estimates for the United States. / En este trabajo se propone un nuevo método para testear el modelo de Grossman-Helpman sobre protección endógena y la formación de grupos de interés (lobbies), que no requiere de datos respecto a la formación de los grupos de interés o de sus contribuciones. Identifica a las industrias políticamente organizadas a partir de datos de producción y comercio que son de acceso común, así como las estimaciones de los parámetros estructurales del modelo. Aplicado a la India, produce resultados que son cualitativamente consistentes con las predicciones del modelo, y que parecen cuantitativamente más plausibles que las estimaciones para los EE.UU obtenidas por métodos alternativos. Nuestras estimaciones implican que la importancia que el gobierno de la India asigna a las contribuciones de los sectores políticamente organizados es una tercera parte de la importancia que le asigna al bienestar social (bruto), muy por encima de las estimaciones existentes para los Estados Unidos.

Suggested Citation

  • Olivier Cadot & Laure Dutoit & Jean Marie Grether & Marcelo Olarreaga, 2013. "Endogenous Tariffs in a Common-Agency Model: A New Empirical Approach Applied to India," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 51(1), pages 25-52, Diciembre.
  • Handle: RePEc:ief:reveye:v:510:y:2013:i:1:p:25-52
    DOI: 10.55444/2451.7321.2013.v51.n1.11875
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    More about this item

    Keywords

    India; Political Economy; Protection;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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