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Possible Unintended Effects of Restrictions on Foreign Lobbying in a Customs Union

Author

Listed:
  • Bandyopadhyay, Subhayu

    () (Federal Reserve Bank of St. Louis)

  • Lahiri, Sajal

    () (Southern Illinois University Carbondale)

Abstract

We consider the interactions between domestic lobbying and cross-border lobbying in a Customs Union (CU) in determining the Common External Tariff (CET). There are two types of cross-border lobbying: (i) lobbying from member-nation firms to the governments of other CU countries, and (ii) lobbying by firms from outside to the CU nation governments. Within this context, we analyze the effect of regulations on foreign lobbying on the equilibrium lobbying levels, and on the CET. If lobbying levels are strategic complements, tightening of restrictions on lobbying from outside the CU unambiguously reduces all types of lobbying. If non-CU firms are relatively large, the CET will rise in response to tighter regulations.

Suggested Citation

  • Bandyopadhyay, Subhayu & Lahiri, Sajal, 2012. "Possible Unintended Effects of Restrictions on Foreign Lobbying in a Customs Union," Working Papers 2012-061, Federal Reserve Bank of St. Louis, revised 06 May 2016.
    • Handle: RePEc:fip:fedlwp:2012-061
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    References listed on IDEAS

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    1. Stoyanov, Andrey, 2009. "Trade policy of a free trade agreement in the presence of foreign lobbying," Journal of International Economics, Elsevier, vol. 77(1), pages 37-49, February.
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    3. Grossman, Gene M & Helpman, Elhanan, 1995. "The Politics of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 85(4), pages 667-690, September.
    4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    5. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-985, December.
    6. Gatsios, Konstantine & Karp, Larry, 1995. "Delegation in a general equilibrium model of customs unions," European Economic Review, Elsevier, vol. 39(2), pages 319-333, February.
    7. Raymond RIEZMAN, 2013. "A 3 × 3 Model of Customs Unions," World Scientific Book Chapters,in: International Trade Agreements and Political Economy, chapter 1, pages 7-20 World Scientific Publishing Co. Pte. Ltd..
    8. Maurice Schiff & L. Alan Winters, 2003. "Regional Integration and Development," World Bank Publications, The World Bank, number 15172, April.
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    More about this item

    Keywords

    Free Trade Area; Customs Union; Preferential Trading Agreements; Domestic lobbying; Cross-border lobbying; External tariffs.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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