Special Interest Groups and the Australia-United States Free Trade Agreement
In the political economy model of Grossman and Helpman (1995), two incumbent governments attempt to negotiate a free trade agreement (FTA), while special interest groups in each country influence negotiations by offering financial contributions to their governments. As a consequence, a set of politically sensitive industries is excluded from the proposed FTA. Using the empirical methodology of Gawande, Sanguinetti, and Bohara (2001), this paper shows that the Grossman-Helpman (1995) model successfully predicts the set of excluded industries for the recently implemented Australia-United States FTA. It is also shown that the set of exclusions favours Australian interest groups, which could indicate that the gains from the FTA are lower for the government of Australia than for the government of the United States.
|Date of creation:||2006|
|Contact details of provider:|| Postal: 35 Stirling Highway, Crawley, W.A. 6009|
Phone: (08) 9380 2918
Fax: (08) 9380 1016
Web page: http://www.business.uwa.edu.au/school/disciplines/economics
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:uwa:wpaper:06-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Verity Chia)
If references are entirely missing, you can add them using this form.