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Collusion, Collective Action and Protection: Theory and Evidence

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  • Richard Damania
  • Per Fredriksson
  • Thomas Osang

Abstract

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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  • Richard Damania & Per Fredriksson & Thomas Osang, 2004. "Collusion, Collective Action and Protection: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 279-308, February.
  • Handle: RePEc:kap:pubcho:v:121:y:2004:i:3:p:279-308
    DOI: 10.1007/s11127-004-1679-x
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