Cross-border political donations and Pareto-efficient tariffs
Lobbying activities across international borders could promote international trade policy cooperation because of two distinctive characteristics. First, special interest groups use cross-border donations as tools to wield their influence on ruling parties of other countries directly. Second, cross-border donations make ruling parties take into account the impact of their policy on other countries. They promote efficiency of policy formation. Pareto-efficient tariffs are attained under the conditions that all individuals participate in lobbying activities, ruling parties value the sum of cross-border donations and the sum of domestic gross welfare and domestic donations equally, and contribution schedules are observable to anyone.
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Volume (Year): 21 (2012)
Issue (Month): 4 (July)
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