The Complementarity between Endogenous Protection and Direct Foreign Investment
This paper studies the endogenous relationship between direct foreign investment (DFI) and trade restriction. A domestic labor union interested in both employment and wages bargains with a foreign firm and lobbies against foreign imports. By endogeneizing the wage rate and incorporating resource-using lobbying, we show that more DFI results in higher lobbying efforts and lower imports under fairly general conditions, i.e. a reversal of quid pro quo DFI. We also conduct comparative statics analysis on wages and lobbying efforts.
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|Date of creation:||Feb 1995|
|Date of revision:|
|Publication status:||Published in Discussion paper series (1995), 13: 1-19|
|Contact details of provider:|| Postal: 3-5-21 Midori, Otaru, 047-8501|
Web page: http://www.otaru-uc.ac.jp/dept/econ/
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