Protection versus Free Trade: Lobbying Competition between Domestic and Foreign Firms |
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| Authors: | Dapeng Cai Jie Li |
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| Institution: | 1. Institute for Advanced Research, Nagoya University, Furo-cho, Chikusa-ku, Nagoya, Japan 464-8601;2. Institute of Industrial Economics, Jinan University, No. 3. 601 Huangpu-dadaoxi Road, Guangzhou, P.R. China, 510632 |
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| Abstract: | This article considers how political interaction between policymakers and domestic and foreign firms endogenously determines tariff rates. We show that because of lobbying competition between foreign and domestic firms, even a less competitive foreign firm can successfully elicit a tariff reduction under reasonable conditions. Moreover, lobbying competition may also increase the level of aggregate domestic welfare when the market powers of the competing firms are sufficiently alike. |
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| Keywords: | D72 F12 F13 |
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