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

  • Benjamin Liebman

    (St. Joseph's University)

  • Kara M. Olson

    (American University)

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.

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File URL: http://128.118.178.162/eps/it/papers/0408/0408003.pdf
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Paper provided by EconWPA in its series International Trade with number 0408003.

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Length: 17 pages
Date of creation: 16 Aug 2004
Date of revision:
Handle: RePEc:wpa:wuwpit:0408003
Note: Type of Document - pdf; pages: 17
Contact details of provider: Web page: http://128.118.178.162

References listed on IDEAS
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  1. Hansen, Wendy L & Prusa, Thomas J, 1997. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Review of International Economics, Wiley Blackwell, vol. 5(2), pages 230-45, May.
  2. Kara M. Olson, 2004. "Subsidizing Rent-Seeking: Antidumping Protection and the Byrd Amendment," International Trade 0407005, EconWPA.
  3. Robert E. Baldwin & Christopher S. Magee, 1998. "Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills," NBER Working Papers 6376, National Bureau of Economic Research, Inc.
  4. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. Chappell, Henry W, Jr, 1982. "Campaign Contributions and Congressional Voting: A Simultaneous Probit-Tobit Model," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 77-83, February.
  6. De Vault, James M, 2002. " Congressional Dominance and the International Trade Commission," Public Choice, Springer, vol. 110(1-2), pages 1-22, January.
  7. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  8. Benjamin Liebman, 2004. "ITC voting behavior on sunset reviews," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(3), pages 446-475, September.
  9. COLLIE, David R. & VANDENBUSSCHE, Hylke, . "Tariffs and the Byrd amendment," CORE Discussion Papers RP -1890, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December.
  11. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
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