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Openness, Lobbying, and Provision of Infrastructure


  • Ujjayant Chakravorty

    () (Department of Economics, University of Central Florida)

  • Joy Mazumdar

    (Department of Economics, Wellesley College)


Casual empirical evidence suggests that infrastructure provision is higher in economies that are open to world trade. We develop a model of imperfect competition to show that open economies are likely to provide more infrastructure than closed economies. If infrastructure is financed by taxing a producer lobby, the open economy will overprovide while the closed economy will underinvest; an open economy approaches optimal provision when this lobby group is small in size. If financing of infrastructure is done by taxing the whole population, the closed-economy outcome may be preferred relative to that of the open economy.

Suggested Citation

  • Ujjayant Chakravorty & Joy Mazumdar, 2008. "Openness, Lobbying, and Provision of Infrastructure," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 1149-1166, April.
  • Handle: RePEc:sej:ancoec:v:74:4:y:2008:p:1149-1166

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    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development


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