Trade Liberalization and Industrial Concentration: Evidence from Brazil
26 Pages Posted: 18 Mar 2004
Date Written: March 10, 2004
This paper applies an endogenous lobby formation model to explain the extent of trade protection granted to Brazilian manufacturing industries during the 1988-1994 trade liberalization episode. Using a panel data set covering this period, we find that even in an environment in which a major regime shift has been introduced, more concentrated sectors have been able to obtain policy advantages, that lead to a reduction in international competition. The importance of industry structure appears to be substantial: In our baseline specification, an increase in concentration by 20% leads to an increase in protection by 5%-7%.
Keywords: Lobby formation, tariffs, Brazil
JEL Classification: F13
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