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Collusion, Collective Action and Protection: Theory and Evidence

  • Richard Damania
  • Per Fredriksson

    ()

  • Thomas Osang

This paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors. Thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying. We show that greatercollusion reduces firm contributionsto tariff lobbying, when the governmentvalues welfare sufficiently and thecross-price elasticity between the domesticand foreign goods is sufficiently high. The empirical evidence from the U.S.supports the theory. Greater collusionreduces the level of PAC contributions. Copyright Kluwer Academic Publishers 2004

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File URL: http://hdl.handle.net/10.1007/s11127-004-1679-x
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Article provided by Springer in its journal Public Choice.

Volume (Year): 121 (2004)
Issue (Month): 3 (February)
Pages: 279-308

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Handle: RePEc:kap:pubcho:v:121:y:2004:i:3:p:279-308
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