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Trade Liberalization and Industrial Concentration:Evidence from Brazil

  • Giovanni Facchini; Pedro Cavalcanti Ferreira

This paper applies an endogenous lobby formation model to explain the extent of trade protection granted to Brazilian manufacturing industries during the 1988-1994 trade liberalization episode. Using a panel data set covering this period, we find that even in an environment in which a major regime shift has been introduced,more concentrated sectors have been able to obtain policy advantages, that lead to a reduction in international competition. The importance of industry structure appears to be substantial: In our baseline speci.cation, an increase in concentration by 20% leads to an increase in protection by 5%-7%.

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Paper provided by Econometric Society in its series Econometric Society 2004 Latin American Meetings with number 126.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:latm04:126
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  1. Pedro Cavalcanti Ferreira & JosÈ Luiz Rossi, 2003. "New Evidence from Brazil on Trade Liberalization and Productivity Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1383-1405, November.
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  3. Pabo Sanguinetti & Alok Bohara & Kishore Guatanabe, 2003. "Trade Diverion and Declinning Tariffs: Evidence from MERCOSUR," Department of Economics Working Papers 003, Universidad Torcuato Di Tella.
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  7. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  8. Assunção, Juliano Junqueira & Moreira, Humberto Ataíde, 2004. "Land taxes in a Latin American context," Economics Working Papers (Ensaios Economicos da EPGE) 526, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  9. Cristina Terra & Frederico Valladares, 2009. "Real Exchange Rate Misalignments," THEMA Working Papers 2009-03, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  10. Monteiro, Paulo Klinger & Araújo, Aloísio Pessoa de & Martins-da-Rocha, Victor Filipe, 2003. "Equilibria in security markets with a continuum of agents," Economics Working Papers (Ensaios Economicos da EPGE) 513, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  11. Pecorino, Paul, 1998. "Is There a Free-Rider Problem in Lobbying? Endogenous Tariffs, Trigger Strategies, and the Number of Firms," American Economic Review, American Economic Association, vol. 88(3), pages 652-60, June.
  12. Aloisio Araujo & Humberto Moreira, 2004. "The trade-off between incentives and endogenous risk," Econometric Society 2004 Latin American Meetings 152, Econometric Society.
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  14. Rodrik, Dani, 1986. "Tariffs, subsidies, and welfare with endogenous policy," Journal of International Economics, Elsevier, vol. 21(3-4), pages 285-299, November.
  15. Souza, Leonardo Rocha, 2003. "A note on Chambers's "long memory and aggregation in macroeconomic time series"," Economics Working Papers (Ensaios Economicos da EPGE) 503, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  16. Pinelopi Koujianou Goldberg & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  17. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, May.
  18. Moreira, Humberto Ataíde & Costa, Cristiano Machado & Ferreira, Daniel Bernardo Soares, 2004. "Biased managers, organizational design, and incentive provision," Economics Working Papers (Ensaios Economicos da EPGE) 525, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  19. Magee, Christopher, 2002. "Endogenous trade policy and lobby formation: an application to the free-rider problem," Journal of International Economics, Elsevier, vol. 57(2), pages 449-471, August.
  20. Neri, Marcelo Cortes & Soares, Wagner Lopes, 2003. "Idade, incapacidade e a inflação do número de pessoas com deficiência," Economics Working Papers (Ensaios Economicos da EPGE) 490, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  21. Olarreaga, Marcelo & Soloaga, Isidro, 1998. "Endogenous Tariff Formation: The Case of Mercosur," CEPR Discussion Papers 1848, C.E.P.R. Discussion Papers.
  22. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
  23. Theo Eicher & Thomas Osang, 2002. "Protection for Sale: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 92(5), pages 1702-1710, December.
  24. Maggi, G & Rodriguez-Clare, A, 1996. "The Value of Trade Agreements in the Presence of Political Pressures," Papers 180, Princeton, Woodrow Wilson School - Public and International Affairs.
  25. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
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