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Spurious Injury as Indirect Rent Seeking: Free Trade Under The Prospect of Protection


  • Leidy, M.P.
  • Hoekman, B.M.


In the literature on directly unproductive profit seeking or rent seeking, intervention-seeking by labor and industry groups is generally restricted to direct lobbying activity. However, import-competing producers may have an additional instrument to influence the decision to grant protection. Under well-established injury criteria for protection import-competing producers have an incentive, either collectively or individually, to feign injury. To the extent that the free-rider problem can be overcome, orchestrating the appearance of injury is an intervention-seeking activity that may be complementary to DUP lobbying. When the established indicators of industry well-being include variables controlled by the prospective beneficiaries, therefore, free trade under the prospect of protection is potentially accompanied by a concomitant spurious-injury distortion. Some of the positive and welfare implications of the theory of spurious injury are investigated in both a partial equilibrium framework and in the Heckscher-Ohlin model. Copyright 1991 Blackwell Publishers Ltd..
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  • Leidy, M.P. & Hoekman, B.M., 1991. "Spurious Injury as Indirect Rent Seeking: Free Trade Under The Prospect of Protection," Working Papers 273, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:273

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    References listed on IDEAS

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    7. Dani Rodrik, 1990. "Premature Liberalization, Incomplete Stabilization: the Ozal Decade in Turkey," NBER Working Papers 3300, National Bureau of Economic Research, Inc.
    8. Roberts, Mark J., 1984. "Testing oligopolistic behavior," International Journal of Industrial Organization, Elsevier, vol. 2(4), pages 367-383, December.
    9. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
    10. Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier.
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    Cited by:

    1. Greaney, Theresa M., 1999. "Manipulating market shares: The indirect effects of voluntary import expansions (VIEs)," Japan and the World Economy, Elsevier, vol. 11(1), pages 95-113, January.
    2. Bernard Hoekman, 2004. "Policies Facilitating Firm Adjustment to Globalization," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 457-473, Autumn.
    3. Erbahar, Aksel & Zi, Yuan, 2017. "Cascading trade protection: Evidence from the US," Journal of International Economics, Elsevier, vol. 108(C), pages 274-299.
    4. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
    5. Aksel Erbahar & Yuan Zi, 2015. "Cascading Trade Protection: Theory and Evidence from the U.S," CTEI Working Papers series 04-2015, Centre for Trade and Economic Integration, The Graduate Institute.

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    free trade ; competition;


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