Protection for Sale: An Empirical Investigation

32 Pages Posted: 13 Jul 2000 Last revised: 28 Sep 2022

See all articles by Pinelopi Goldberg

Pinelopi Goldberg

Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation; Peterson Institute for International Economics; Bureau for Research and Economic Analysis of Development (BREAD); Centre for Economic Policy Research (CEPR)

Giovanni Maggi

Yale University; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Date Written: February 1997

Abstract

A prominent model in the recent political-economy literature on trade policy is Grossman and Helpman's (1994) Protection for Sale' model. This model yields clear predictions for the cross-sectional structure of trade protection. The objective of our" paper is to check whether the predictions of the Grossman-Helpman model are consistent with the data and, if the model finds support, to estimate its two key structural parameters: the government's valuation of welfare relative to contributions, and the fraction of the voting population represented by a lobby. We find that the pattern of protection in the U.S. in 1983 is consistent with the basic predictions of the model. Our estimate of the government's valuation of welfare relative to contributions is surprisingly high; the weight of welfare in the government's objective function is estimated to be between 50 and 88 times the weight of contributions.

Suggested Citation

Goldberg, Pinelopi (Penny) and Maggi, Giovanni, Protection for Sale: An Empirical Investigation (February 1997). NBER Working Paper No. w5942, Available at SSRN: https://ssrn.com/abstract=225723

Pinelopi (Penny) Goldberg (Contact Author)

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Giovanni Maggi

Yale University ( email )

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National Bureau of Economic Research (NBER)

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Yale University - Cowles Foundation

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