Protectionist Lobbying and Strategic Investment
نویسندگان
چکیده
Why are some uncompetitive industry sectors so effective in lobbying for greater protection and support? This paper attempts to explain the lobbying success of these industries in terms of the strategic role of investment in technology as a credible commitment device. By eschewing potentially profitable investment opportunities firms credibly signal to the government that the cost of a tariff reduction will be substantial. This enables the firms to lobby more effectively for policy concessions Political considerations may therefore provide a significant incentive for firms to reject investment in newer technologies, even when these lower production costs. JEL Codes: D70, F13
منابع مشابه
Price-Capping Regulation as a Protectionist Strategy in Developing Countries
In developing countries undergoing liberalising economic reforms, there are typically local incumbents facing the loss of protection. Strategic lobbying by such firms for a price-capping regulatory regime is, under certain conditions, one way in which they can deter entry by competitors who are likely to be foreign firms. We show that a regulatory price can be set such that the net profit of th...
متن کاملAll-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence
The paper characterizes the mixed-strategy equilibria in all-pay auctions with endogenous prizes that depend positively on own effort and negatively on the effort of competitors. Such auctions arise naturally in the context of investment games, lobbying games, and promotion tournaments. We also provide an experimental analysis of a special case which captures the strategic situation of a two-st...
متن کاملDeterminants of Trade Protection in Contemporary Democracies: Whose interests do elected officials serve through trade protection?
Earlier economic studies attribute the presence of trade barriers to the fact that protectionist interest groups better articulate their policy demands due to their greater abilities to overcome collective action problems. Contrary to consumer groups, protectionist interests have strong incentive to influence politicians through lobbying and campaign activities since the benefits of protection ...
متن کاملThe Effect of Real Exchange Rate Volatility on Strategic Investment in Iran
This study examines the impacts of real exchange rate fluctuations on the companies' strategic investments in Iran. The data of 92 listed companies in Tehran Stock Exchange during the period of 2002-2015areused. First, the volatility of exchange rate is estimated by the Generalized Autoregressive Conditional Heteroskedasticity (GARCH). The model is estimated by GMM and system GMM methods. The r...
متن کاملde recherche sur l ’ emploi et les fluctuations économiques ( CREFÉ ) Center for Research on Economic
This paper investigates the effects of business tax lobbying in the presence of investments that are sunk or costly to adjust in the short run. We show that industries which rely more heavily on sunk capital are generally more successful in obtaining tax breaks through lobbying; this reverses the usual logic of the capital levy problem. Nevertheless, these industries invest less in long-run equ...
متن کامل