IDEAS home Printed from https://ideas.repec.org/p/zbw/cauewp/1546.html
   My bibliography  Save this paper

Protection for Sale with Imperfect Rent Capturing

Author

Listed:
  • Facchini, Giovanni
  • van Biesebroeck, Johannes
  • Willmann, Gerald

Abstract

We extend the protection for sale framework by modelling non tariff barriers. Explicitly introducing partial rent capturing leads to a testable specification that bridges the gap between the theoretical Grossman and Helpman (1994) model and its empirical implementation, where coverage ratios have been used to measure protection. Our econometric analysis supports the augmented specification and leads to more realistic estimates for the structural parameters of the model.

Suggested Citation

  • Facchini, Giovanni & van Biesebroeck, Johannes & Willmann, Gerald, 2003. "Protection for Sale with Imperfect Rent Capturing," Economics Working Papers 2004-01, Christian-Albrechts-University of Kiel, Department of Economics.
  • Handle: RePEc:zbw:cauewp:1546
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/21978/1/EWP-2004-01.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
    2. Xenia Matschke & Shane M. Sherlund, 2006. "Do Labor Issues Matter in the Determination of U.S. Trade Policy? An Empirical Reevaluation," American Economic Review, American Economic Association, vol. 96(1), pages 405-421, March.
    3. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
    4. Scott Bradford, 2003. "Paying the Price: Final Goods Protection in OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 24-37, February.
    5. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoğlu, 2016. "“Protection For Sale” In A Developing Country: Democracy Vs. Dictatorship," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 9, pages 163-174, World Scientific Publishing Co. Pte. Ltd..
    6. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, University Library of Munich, Germany.
    7. Theo Eicher & Thomas Osang, 2002. "Protection for Sale: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 92(5), pages 1702-1710, December.
    8. Devashish Mitra & Dimitrios D. Thomakos & Mehmet Ulubaşoğlu, 2016. "Can we obtain realistic parameter estimates for the ‘protection for sale’ model?," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 10, pages 175-198, World Scientific Publishing Co. Pte. Ltd..
    9. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-160, February.
    10. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    11. B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
    12. Maskus, Keith E. & Wilson, John S. & Tsunehiro Otsuki, 2000. "Quantifying the impact of technical barriers to trade : a framework for analysis," Policy Research Working Paper Series 2512, The World Bank.
    13. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    14. Lee, Myoung-Jae, 1995. "Semi-parametric Estimation of Simultaneous Equations with Limited Dependent Variables: A Case Study of Female Labour Supply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 187-200, April-Jun.
    15. Phillip McCalman, 2004. "Protection for Sale and Trade Liberalization: an Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 81-94, February.
    16. Maggi, Giovanni & Rodriguez-Clare, Andres, 2000. "Import penetration and the politics of trade protection," Journal of International Economics, Elsevier, vol. 51(2), pages 287-304, August.
    17. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
    18. Nelson, Forrest & Olson, Lawrence, 1978. "Specification and Estimation of a Simultaneous-Equation Model with Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 695-709, October.
    19. 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.
    20. Kishore Gawande & Pravin Krishna & Michael J. Robbins, 2006. "Foreign Lobbies and U.S. Trade Policy," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 563-571, August.
    21. Amemiya, Takeshi, 1979. "The Estimation of a Simultaneous-Equation Tobit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 169-181, February.
    22. Hadi Salehi Esfahani, 2005. "Searching for the (dark) forces behind protection," Oxford Economic Papers, Oxford University Press, vol. 57(2), pages 283-314, April.
    23. Alan V. Deardorff & Robert M. Stern, 1997. "Measurement of Non-Tariff Barriers," OECD Economics Department Working Papers 179, OECD Publishing.
    24. Levy, Philip I., 1999. "Lobbying and international cooperation in tariff setting," Journal of International Economics, Elsevier, vol. 47(2), pages 345-370, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giovanni Facchini & Marcelo Olarreaga & Peri Silva & Gerald Willmann, 2010. "Substitutability and Protectionism: Latin America's Trade Policy and Imports from China and India," World Bank Economic Review, World Bank Group, vol. 24(3), pages 446-473, June.
    2. Graham Mallard, 2014. "Static Common Agency And Political Influence: An Evaluative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 17-35, February.
    3. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2013. "A quantile-based test of protection for sale model," Journal of International Economics, Elsevier, vol. 91(1), pages 40-52.
    4. Anne-Célia Disdier & Frank van Tongeren, 2010. "Non-Tariff Measures in Agri-Food Trade: What Do the Data Tell Us? Evidence from a Cluster Analysis on OECD Imports," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(3), pages 436-455.
    5. Marianna Belloc, 2007. "Protection for Sale in the EU," Working Papers 100, University of Rome La Sapienza, Department of Public Economics.
    6. Zahrnt, Valentin, 2008. "Domestic constituents and the formulation of WTO negotiating positions: what the delegates say," World Trade Review, Cambridge University Press, vol. 7(2), pages 393-421, April.
    7. By Kishore Gawande & Pravin Krishna & Marcelo Olarreaga, 2012. "Lobbying Competition Over Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 115-132, February.
    8. Bombardini, Matilde, 2008. "Firm heterogeneity and lobby participation," Journal of International Economics, Elsevier, vol. 75(2), pages 329-348, July.
    9. Silva, Peri, 2011. "The role of importers and exporters in the determination of the U.S. tariff preferences granted to Latin America," Journal of Development Economics, Elsevier, vol. 94(2), pages 207-219, March.
    10. Facchini, Giovanni & Willmann, Gerald, 2005. "The political economy of international factor mobility," Journal of International Economics, Elsevier, vol. 67(1), pages 201-219, September.
    11. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Is protection really for sale? A survey and directions for future research," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 181-191, March.
    12. Saha, Amrita, 2019. "Trade policy & lobbying effectiveness: Theory and evidence for India," European Journal of Political Economy, Elsevier, vol. 56(C), pages 165-192.
    13. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo.
    14. Barbara Annicchiarico & Enrico Marvasi, 2018. "Protection for Sale with Price Interactions and Incomplete Pass-Through," CEIS Research Paper 435, Tor Vergata University, CEIS, revised 08 Jun 2018.
    15. Toke S. Aidt & Uk Hwang, 2014. "To Ban or Not to Ban: Foreign Lobbying and Cross-National Externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 272-297, February.
    16. Stoyanov, Andrey, 2009. "Trade policy of a free trade agreement in the presence of foreign lobbying," Journal of International Economics, Elsevier, vol. 77(1), pages 37-49, February.
    17. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Protection for sale or surge protection?," European Economic Review, Elsevier, vol. 53(6), pages 675-688, August.
    18. Wilfred J. Ethier, 2013. "The Trade Agreement Embarrassment, Second Version," PIER Working Paper Archive 13-049, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 02 Sep 2013.
    19. Enrico Marvasi, 2013. "Protection for Sale, Monopolistic Competition and Variable Markups," Working Papers - Economics wp2013_11.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    20. Olper, Alessandro, 2017. "The political economy of trade-related regulatory policy: environment and global value chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    21. Rigoberto A. Lopez, 2008. "Does ‘Protection for Sale’ Apply to the US Food Industries?," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 25-40, February.
    22. Annicchiarico, Barbara & Marvasi, Enrico, 2019. "Protection for sale under monopolistic competition: Beyond the CES," European Journal of Political Economy, Elsevier, vol. 60(C).
    23. 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.
    24. 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.).
    25. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Protection for sale or surge protection?," European Economic Review, Elsevier, vol. 53(6), pages 675-688, August.
    2. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Is protection really for sale? A survey and directions for future research," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 181-191, March.
    3. Matschke, Xenia, 2008. "Costly revenue-raising and the case for favoring import-competing industries," Journal of International Economics, Elsevier, vol. 74(1), pages 143-157, January.
    4. Dutt, Pushan & Mitra, Devashish, 2009. "Explaining Agricultural Distortion Patterns : The Roles of Ideology, Inequality, Lobbying and Public Finance," Agricultural Distortions Working Paper Series 50299, World Bank.
    5. Xenia Matschke & Shane M. Sherlund, 2006. "Do Labor Issues Matter in the Determination of U.S. Trade Policy? An Empirical Reevaluation," American Economic Review, American Economic Association, vol. 96(1), pages 405-421, March.
    6. Richard Damania & Per Fredriksson & Thomas Osang, 2004. "Collusion, Collective Action and Protection: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 279-308, February.
    7. Patricia Tovar, 2004. "The Effects of Loss Aversion on Trade Policy and the Anti-Trade Bias Puzzle," Econometric Society 2004 North American Summer Meetings 499, Econometric Society.
    8. Yoto V. Yotov, 2013. "Trade Adjustment, Political Pressure, And Trade Protection Patterns," Economic Inquiry, Western Economic Association International, vol. 51(3), pages 1867-1885, July.
    9. By Kishore Gawande & Pravin Krishna & Marcelo Olarreaga, 2012. "Lobbying Competition Over Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 115-132, February.
    10. Rigoberto A. Lopez, 2008. "Does ‘Protection for Sale’ Apply to the US Food Industries?," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 25-40, February.
    11. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2011. "Do interest groups affect US immigration policy?," Journal of International Economics, Elsevier, vol. 85(1), pages 114-128, September.
    12. Saha, Amrita, 2019. "Trade policy & lobbying effectiveness: Theory and evidence for India," European Journal of Political Economy, Elsevier, vol. 56(C), pages 165-192.
    13. Kishore Gawande & Pravin Krishna & Michael J. Robbins, 2006. "Foreign Lobbies and U.S. Trade Policy," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 563-571, August.
    14. Sonia Naccache, 2008. "The Political Economy of Trade Policy in Tunisia," Working Papers 438, Economic Research Forum, revised 09 Jan 2008.
    15. Marianna Belloc, 2007. "Protection for Sale in the EU," Working Papers 100, University of Rome La Sapienza, Department of Public Economics.
    16. Graham Mallard, 2014. "Static Common Agency And Political Influence: An Evaluative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 17-35, February.
    17. Matschke Xenia, 2010. "Do Labor Market Imperfections Increase Trade Protection? A Theoretical Investigation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-36, June.
    18. Josh Ederington & Jenny Minier, 2008. "Reconsidering the empirical evidence on the Grossman-Helpman model of endogenous protection," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 501-516, May.
    19. Gawande, Kishore & Krishna, Pravin & Olarreaga, Marcelo, 2009. "What Governments Maximize and Why: The View from Trade," International Organization, Cambridge University Press, vol. 63(3), pages 491-532, July.
    20. Giovanni Facchini & Marcelo Olarreaga & Peri Silva & Gerald Willmann, 2010. "Substitutability and Protectionism: Latin America's Trade Policy and Imports from China and India," World Bank Economic Review, World Bank Group, vol. 24(3), pages 446-473, June.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:cauewp:1546. 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: . General contact details of provider: https://edirc.repec.org/data/vakiede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vakiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.