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The Returns from Rent-Seeking: Campaign Contributions, Firm Subsidies, and the Byrd Amendment

Author

Listed:
  • Benjamin Liebman

    (St. Joseph's University)

  • Kara M. Olson

    (American University)

Abstract

This paper examines Congressional support of the Byrd Amendment, a new antidumping law that directs the U.S. Customs Service to distribute collected duties to protected firms. A critical feature of the Byrd Amendment is that it produces a highly transparent measure of how much each firm is rewarded for its rent-seeking efforts to secure the bill’s passage, specifically the dollar value its Byrd disbursement. Therefore, this policy provides researchers with a unique setting in which to study the link between campaign contributions, Congressional behavior, and the subsequent financial returns to firms. Our empirical results show that campaign contributions from potential beneficiaries increased the likelihood that lawmakers would sponsor the Byrd Amendment. We also show that political contributions from the law’s beneficiaries increased with the rewards that they expected to receive, although not by as much as predicted by some political economy models of trade policy.

Suggested Citation

  • Benjamin Liebman & Kara M. Olson, 2004. "The Returns from Rent-Seeking: Campaign Contributions, Firm Subsidies, and the Byrd Amendment," International Trade 0408003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0408003
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    References listed on IDEAS

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    Cited by:

    1. Wang, Xiaosong & Li, Kunwang & Xie, Shenxiang & Hou, Jack, 2013. "How is U.S. trade policy towards China determined?," China Economic Review, Elsevier, vol. 27(C), pages 25-36.
    2. Rajwani, Tazeeb & Liedong, Tahiru Azaaviele, 2015. "Political activity and firm performance within nonmarket research: A review and international comparative assessment," Journal of World Business, Elsevier, vol. 50(2), pages 273-283.
    3. John Gilbert & Reza Oladi, 2012. "Net campaign contributions, agricultural interests, and votes on liberalizing trade with China," Public Choice, Springer, vol. 150(3), pages 745-769, March.
    4. Philip G. Gayle & Thitima Puttitanun, 2009. "Has the Byrd Amendment Affected US Imports?," The World Economy, Wiley Blackwell, vol. 32(4), pages 629-642, April.
    5. Nownes Anthony J. & Aitalieva Nurgul R., 2013. "The political activities of American corporate leaders," Business and Politics, De Gruyter, vol. 15(4), pages 493-527, December.
    6. Carolyn L. Evans & Shane M. Sherlund, 2011. "Are Antidumping Duties for Sale? Case-Level Evidence on the Grossman-Helpman Protection for Sale Model," Southern Economic Journal, John Wiley & Sons, vol. 78(2), pages 330-357, October.
    7. Kara M. Reynolds, 2005. "Anticipated versus Realized Benefits: Can Event Studies Be Used To Predict the Impact of New Regulations?," International Trade 0512005, University Library of Munich, Germany.
    8. Benjamin Liebman & Kasaundra Tomlin, 2015. "World Trade Organization sanctions, implementation, and retaliation," Empirical Economics, Springer, vol. 48(2), pages 715-745, March.
    9. Carolyn L. Evans & Shane M. Sherlund, 2006. "Are antidumping duties for sale? case-level evidence on the Grossman-Helpman protection for sale model," International Finance Discussion Papers 888, Board of Governors of the Federal Reserve System (U.S.).
    10. Carolyn L. Evans & Shane M. Sherlund, 2011. "Are Antidumping Duties for Sale? Case-Level Evidence on the Grossman-Helpman Protection for Sale Model," Southern Economic Journal, Southern Economic Association, vol. 78(2), pages 330-357, October.

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    More about this item

    Keywords

    Byrd Amendment; Antidumping; Campaign Contributions; Political Economy of Trade Policy;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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