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To Ban or Not to Ban: Foreign Lobbying and Cross‐National Externalities

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  • Toke S. Aidt
  • Uk Hwang

Abstract

This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize cross‐national externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation. Bannir ou ne pas bannir : lobbying étranger et effets externes transnationaux. Ce texte étudie les coûts et avantages du lobbying étranger. On montre quand et comment que le lobbying étranger peut aider à internaliser des effets externes transnationaux. On suggère que c'est souvent un avantage qu'on est porté à négliger du lobbying étranger. On étudie sous quelles conditions une règle constitutionnelle bannissant le lobbying étranger peut être dans l'intérêt national d'un pays. Un facteur clé dans ce calcul est le fait que les intérêts des groupes étrangers coincident ou non avec ceux des groupes nationaux non‐organisés. On illustre la logique sous‐jacente à l'aide d'exemples portant sur la politique commerciale et la réglementation environnementale.

Suggested Citation

  • Toke S. Aidt & Uk Hwang, 2014. "To Ban or Not to Ban: Foreign Lobbying and Cross‐National Externalities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(1), pages 272-297, February.
  • Handle: RePEc:wly:canjec:v:47:y:2014:i:1:p:272-297
    DOI: 10.1111/caje.12074
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    Cited by:

    1. Mathilde Lebrand, 2016. "Profit Shifting and FDI Restrictions," CESifo Working Paper Series 5885, CESifo.
    2. Bandyopadhyay, Subhayu & Sandler, Todd, 2023. "Politically influenced counterterrorism policy and welfare efficiency," European Journal of Political Economy, Elsevier, vol. 76(C).
    3. Thomas Groll & Anja Prummer, 2016. "Whom to Lobby? Targeting in Political Networks," Working Papers 808, Queen Mary University of London, School of Economics and Finance.
    4. Bontems, Philippe & Cheikbossian, Guillaume & Hafidi, Houda, 2024. "Environmental Tax Competition and Welfare: The Good News about Lobbies," TSE Working Papers 24-1551, Toulouse School of Economics (TSE).
    5. Aidt, Toke S. & Albornoz, Facundo & Gassebner, Martin, 2018. "The golden hello and political transitions," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 157-173.
    6. Fink, Alexander & Stahl, Jörg R., 2020. "The value of international political connections: Evidence from Trump's 2016 surprise election," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 691-700.
    7. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2024. "To Cut or not to Cut: Deforestation Policy under the Shadow of Foreign Influence," Working Papers 1441, Barcelona School of Economics.
    8. Achim Hagen & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2021. "National political pressure groups and the stability of international environmental agreements," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(3), pages 405-425, September.
    9. Pierre Fauvet & Sébastien Rouillon, 2016. "Would you trust lobbies?," Public Choice, Springer, vol. 167(3), pages 201-219, June.
    10. Yu, Ping, 2020. "Carbon tax/subsidy policy choice and its effects in the presence of interest groups," Energy Policy, Elsevier, vol. 147(C).
    11. Fünfgelt, Joachim & Schulze, Günther G., 2016. "Endogenous environmental policy for small open economies with transboundary pollution," Economic Modelling, Elsevier, vol. 57(C), pages 294-310.
    12. Thomas Groll & Anja Prummer, 2016. "Whom to Lobby? Targeting in Political Networks," Working Papers 808, Queen Mary University of London, School of Economics and Finance.
    13. Achim Hagen & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2016. "The Influence of Political Pressure Groups on the Stability of International Environmental Agreements," Working Papers V-391-16, University of Oldenburg, Department of Economics, revised Aug 2016.
    14. Ahmed Waqar Qasim & Jun-ichi Itaya, 2019. "Heterogeneous Firms and Lobby Participation Decision," Economics Bulletin, AccessEcon, vol. 39(4), pages 2415-2422.
    15. Yu-Bong Lai, 2016. "Does Tax Competition Reduce Corruption?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(4), pages 331-356, September.

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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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