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Protection for Sale with Imperfect Rent CapturingGiovanni FacchiniTinbergen Institute Johannes Van BiesebroeckK.U.Leuven; Centre for Economic Policy Research (CEPR) Gerald WillmannUniversity of Bielefeld; IfW Kiel; KU Leuven; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) April 2005 NBER Working Paper No. w11269 Abstract: Structurally estimating the Grossman and Helpman (1994) model using coverage ratios that include non-tariff barriers leads to biased parameter estimates. We develop a "protection for sale" theoretical framework consistent with the data, by explicitly allowing for non-tariff barriers. Introducing partial rent capturing we obtain a testable specification which finds support in the data. Our results suggest that average rent capturing is in the order of 72-75 percent.
Number of Pages in PDF File: 36 working papers seriesDate posted: May 25, 2006Suggested CitationContact Information
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