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Tariff Protection Revisited: Implications for Strategic Import Tariff

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  • Jongmin Lee

    (Kangwon National University)

Abstract

This paper employs the influence-driven approach to analyze the impact of lobbying on the strategic trade policy in a model of Cournot duopoly. That is to extend the analysis of Brander and Spencer(1984). When an industry special interest group lobbies the domestic government for trade protection, the politically sustainable equilibrium level of protection is higher than the optimal strategic level. This implies that the presence of lobbying reinforces the argument for strategic intervention designed to capture proï¬ ts from rival foreign ï¬ rms(or industry). This paper also shows that under various scenarios with diflerent political conditions the politically-determined tariffs are always higher than theoptimal-shifting tariff.

Suggested Citation

  • Jongmin Lee, 2003. "Tariff Protection Revisited: Implications for Strategic Import Tariff," Korean Economic Review, Korean Economic Association, vol. 19, pages 131-152.
    • Handle: RePEc:kea:keappr:ker-200306-19-1-06
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    More about this item

    Keywords

    Lobbying; political equilibrium tariff; equilibrium contribution;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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