Endogenous Lobbying Position in Intra-Industry Trade
Hong Kong University of Science and Technology
12 Pages Posted: 30 Jan 2002
Date Written: November 2001
A two-country, two-firm model has been developed to study equilibrium lobbying positions in intra-industry trade. A firm chooses either a protectionist position or a free-trader position. The model predicts that taking the free-trader (protectionist) lobbying position is an efficient (inefficient) firm's dominant strategy. In addition, for any lobbying position taken by a firm, its lobbying effort always decreases as its production cost increases. The findings help shed light on some empirical observations.
Keywords: Lobbying, Endogenous position, Intra-industry trade, Protectionist, Free trader
JEL Classification: F12, F13
Suggested Citation: Suggested Citation