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American Economic Review: Vol. 89 No. 5 (December 1999)
AER Volume. 89, Issue 5 | 
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Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination
Article Citation
Mitra, Devashish. 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination."
American Economic Review,
89(5): 1116-1134.
DOI: 10.1257/aer.89.5.1116
DOI: 10.1257/aer.89.5.1116
Abstract
This paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions. Under certain conditions, free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare. Moreover, greater inequality in asset distribution results in a greater number of lobbies and, in most cases, more protection for each of these lobbies. Furthermore, industries with higher levels of capital stock, fewer capitalists, more inelastic demand, and smaller geographical dispersion are the ones that get organized.
Article Full-Text Access
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Authors
Mitra, Devashish (FL International U)
JEL Classifications
F13: Trade Policy; International Trade Organizations
D72: Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D72: Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
