Protection for Sale with Imperfect Rent Capturing

Facchini, Giovanni; Van Biesebroeck, Johannes; Willmann, Gerald

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Protection for Sale with Imperfect Rent Capturing

NBER Working Paper No. w11269

36 Pages Posted: 25 May 2006 Last revised: 17 Oct 2022

See all articles by Giovanni Facchini

Johannes Van Biesebroeck

K.U.Leuven; Centre for Economic Policy Research (CEPR)

Gerald Willmann

Bielefeld University; IfW Kiel; KU Leuven; CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: April 2005

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.

Suggested Citation: Suggested Citation

Facchini, Giovanni and Van Biesebroeck, Johannes and Willmann, Gerald, Protection for Sale with Imperfect Rent Capturing (April 2005). NBER Working Paper No. w11269, Available at SSRN: https://ssrn.com/abstract=705589