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Cross-Border Political Donations and Pareto-Efficient Tariffs


  • Masahiro Endoh

    () (Economic Growth Center, Yale University)


This paper examines the effects of lobbying activities across international borders, on determining each country’s import tariff in a multi-principal, multi-agent, menu-auction model. Cross-border political donations could promote international policy cooperation because of two of their distinctive characteristics. First, special interest groups use cross-border donations as tools to wield their influence on ruling parties of other countries directly, which promotes efficiency of policy formation. Second, for ruling parties of countries, cross-border donations make them take into account the impact of their policy on other countries, which makes them more sensitive to other countries’ welfare and, therefore, more cooperative with others. When ruling parties estimate the worth of political contributions from national special interest groups and from foreign lobbying groups with the same weight, Pareto-efficient tariffs are attained at which world welfare is maximized.

Suggested Citation

  • Masahiro Endoh, 2005. "Cross-Border Political Donations and Pareto-Efficient Tariffs," Working Papers 915, Economic Growth Center, Yale University.
  • Handle: RePEc:egc:wpaper:915

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    References listed on IDEAS

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    Cited by:

    1. Hayato Kato, 2017. "Lobbying and Tax Competition in an Oligopolistic Industry: A Reverse Home Market Effect," Keio-IES Discussion Paper Series 2017-028, Institute for Economics Studies, Keio University.
    2. Roberto Bonfatti, 2017. "An economic theory of foreign interventions and regime change," Canadian Journal of Economics, Canadian Economics Association, vol. 50(1), pages 306-339, February.
    3. Guriev, Sergei & Yakovlev, Evgeny & Zhuravskaya, Ekaterina, 2010. "Interest group politics in a federation," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 730-748, October.
    4. Joan Canton, 2009. "Environmentalists' Behaviour and Environmental Policies policies," Working Papers 2009.76, Fondazione Eni Enrico Mattei.

    More about this item


    Cross-border Donations; Truthful Equilibrium; Pareto-Efficient Tariffs;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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