Can We Obtain Realistic Parameter Estimates for the 'Protection for Sale' Model?

24 Pages Posted: 11 May 2006

See all articles by Devashish Mitra

Devashish Mitra

Syracuse University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Dimitrios D. Thomakos

University of Athens, Department of Business Administration

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance

Abstract

In the Grossman and Helpman (1994) model of endogenous trade protection, sectoral lobbies try to influence an incumbent government that maximizes a weighted sum of political contributions and aggregate welfare. We empirically investigate this model using U.S. and Turkish data. Our specification is more tightly tied to theory than those in existing studies. Additionally, we assume all specific-factor owners to be organized into different lobbies. These changes, validated by hypothesis tests, yield more realistic parameter estimates of the government's concern for aggregate welfare and of the fraction of population organized into lobbies.

Suggested Citation

Mitra, Devashish and Thomakos, Dimitrios D. and Ulubasoglu, Mehmet Ali, Can We Obtain Realistic Parameter Estimates for the 'Protection for Sale' Model?. Canadian Journal of Economics, Vol. 39, No. 1, pp. 187-210, February 2006, Available at SSRN: https://ssrn.com/abstract=877356

Devashish Mitra (Contact Author)

Syracuse University - Department of Economics ( email )

The Maxwell School of Citizenship & Public Affairs
133 Eggers Hall
Syracuse, NY 13244-1020
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Dimitrios D. Thomakos

University of Athens, Department of Business Administration ( email )

Athens
Greece

HOME PAGE: http://ba.uoa.gr/

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance ( email )

Burwood, Victoria 3215
Australia
+61 3 9244 6592 (Phone)

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