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Protectionist Lobbying and Strategic Investment

Author

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  • Richard Damania

    () (School of Economics, University of Adelaide, Australia)

Abstract

Why are some uncompetitive industry sectors so effective in lobbying for greater protection and support? This paper attempts to explain the lobbying success of these industries in terms of the strategic role of investment in technology as a credible commitment device. By eschewing potentially profitable investment opportunities firms credibly signal to the government that the cost of a tariff reduction will be substantial. This enables the firms to lobby more effectively for policy concessions Political considerations may therefore provide a significant incentive for firms to reject investment in newer technologies, even when these lower production costs.

Suggested Citation

  • Richard Damania, 2002. "Protectionist Lobbying and Strategic Investment," Centre for International Economic Studies Working Papers 2002-36, University of Adelaide, Centre for International Economic Studies.
  • Handle: RePEc:adl:cieswp:2002-36
    as

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    File URL: http://www.adelaide.edu.au/cies/papers/0236.pdf
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    References listed on IDEAS

    as
    1. Damania, R., 2001. "When the Weak Win: The Role of Investment in Environmental Lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 1-22, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Tariffs; Investment; Lobbying;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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