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

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Listed author(s):
  • 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.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2012-061.

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Length: 19 pages
Date of creation: 2012
Date of revision: 06 May 2016
Handle: RePEc:fip:fedlwp:2012-061
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Keywords: Free Trade Area; Customs Union; Preferential Trading Agreements; Domestic lobbying; Cross-border lobbying; External tariffs.;

Find related papers by JEL classification:

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

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  1. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
  2. 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.
  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. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-1187, December.
  5. Maurice Schiff & L. Alan Winters, 2003. "Regional Integration and Development," World Bank Publications, The World Bank, number 15172, April.
  6. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-985, December.
  7. 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.
  8. 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..
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