Protection for Free? The Political Economy of U.S. Tariff Suspensions

50 Pages Posted: 1 Feb 2011

See all articles by Anna Maria Mayda

Anna Maria Mayda

Georgetown University - Department of Economics; IZA Institute of Labor Economics

Rodney D. Ludema

Georgetown University - Department of Economics

Prachi Mishra

International Monetary Fund (IMF) - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: September 2010

Abstract

This paper studies the political influence of individual firms on Congressional decisions to suspend tariffs on U.S. imports of intermediate goods. We develop a model in which firms influence the government by transmitting information about the value of protection, via costless messages (cheap-talk) and costly messages (lobbying). We estimate our model using firm-level data on tariff suspension bills and lobbying expenditures from 1999-2006, and find that indeed verbal opposition by import-competing firms, with no lobbying, significantly reduces the probability of a suspension being granted. In addition, lobbying expenditures by proponent and opponent firms sway this probability in opposite directions.

Keywords: Corporate sector, Economic models, Import tariffs, Imports, Political economy, Tariff structures, Trade policy, United States

Suggested Citation

Mayda, Anna Maria and Ludema, Rodney D. and Mishra, Prachi, Protection for Free? The Political Economy of U.S. Tariff Suspensions (September 2010). IMF Working Papers, Vol. , pp. 1-48, 2010. Available at SSRN: https://ssrn.com/abstract=1750699

Anna Maria Mayda

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Rodney D. Ludema

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-1429 (Phone)
202-687-6102 (Fax)

Prachi Mishra

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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