Protection for Sale: An Empirical Investigation

Special Interest Groups and Trade Policy in the EU

“…The political weights turn out to be: a = 83 and b = 0.58. We observe that the estimated value of a is consistent with previous studies already mentioned in this paper 34.96 * * * 0.000 1/a = 0 and b = 1 29.73 * * * 0.000 α L = 0 341.72 * * * 0.000 α L = 0, 1/a = 0 and b = 1 241.56 * * * 0.000 (Gawande and Bandyopadhyay 2000;Goldberg and Maggi 1999;Mitra et al 2002). A large value of this parameter implies that the government does not substantially differentiate between the relative weights on (either national or European) specific-factor owners' and total population's welfare.…”

“…Three main predictions are obtained: (1) Protection is higher in organized sectors than in unorganized ones; (2) Protection is higher in industries with lower import elasticity; (3) Protection is a decreasing (increasing) function of the import penetration ratio in the organized (unorganized) sectors. The validity of these predictions has been verified for single-country studies: Gawande and Bandyopadhyay (2000) and Goldberg and Maggi (1999)-United States; Mitra et al (2002)-Turkey;and McCalman (2004)-Australia. In the more recent literature, the GH framework has offered the basis to a number of extensions and adaptations for the analysis of related topics: trade blocs formation, trade bargaining, liberalization reforms, and so on (e.g.…”

Special-interest groups and growth

“…For example, Li and Xu (2002) link interest groups (and democracy) to the structure of the telecommunications industry; Roberts (1990), Fisman (2001, Jayachandran (2006), and Dombrovsky (2008) all link the political connections of firms to firm performance; a large literature indicates industries that lobby for trade protection get what they ask for (see, for example, Goldberg andMaggi 1999 andGawande andBandyopadhyay 2000); groups have been linked to volatility in fiscal, trade, and monetary policy (Coates et al 2009); Kroszner and Strahan (1999) argue that interest group factors explain the timing of intrastate banking deregulation in the United States; Rajan and Zingales (2003) find evidence that suggests groups impede financial development. However, it remains a challenge for future research to construct a complete chain of evidence, from groups to a mechanism to growth, in a systematic and comprehensive way.…”

Auctions or grandfathering: the political economy of tradable emission permits

“…When I = 1, firms still can trade permits within the industry.9 The empirical studies testing the Grossman-Helpman model reveal that the governments attach positive weights to both the political contributions and the social welfare (see, e.g.,Goldberg and Maggi 1999;Gawande and Bandyopadhyay 2000). These results can justify the setting of the government's objective function.…”