Protection for Sale with Imperfect Rent Capturing

29 Pages Posted: 15 Nov 2006

See all articles by Giovanni Facchini

Giovanni Facchini

Tinbergen Institute

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)

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Abstract

Grossman and Helpman (1994) explain tariffs as the outcome of a lobbying process. In most empirical implementations of this framework protection is instead measured using non-tariff barriers. Since tariffs allow the government to fully capture the rents from protection, while non-tariff barriers do not, the existing parameter estimates of the protection for sale model are likely to be biased. To address this problem, we augment the framework by considering instruments that allow partial capturing. Our specification is supported by the data, where we find that only 72-75% of the rent from protection is appropriated by the government.

Suggested Citation

Facchini, Giovanni and Van Biesebroeck, Johannes and Willmann, Gerald, Protection for Sale with Imperfect Rent Capturing. Canadian Journal of Economics, Vol. 39, No. 3, pp. 845-873, August 2006. Available at SSRN: https://ssrn.com/abstract=944946 or http://dx.doi.org/10.1111/j.1540-5982.2006.00373.x

Giovanni Facchini (Contact Author)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

HOME PAGE: http://paople.few.eur.nl/facchini

Johannes Van Biesebroeck

K.U.Leuven ( email )

Naamsestraat 69
B-3000 Leuven
Belgium
+3216326793 (Phone)
+3216326796 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/public/N07057/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Gerald Willmann

Bielefeld University ( email )

Universit├Ątsstra├če 25
Bielefeld, NRW 33613
Germany

IfW Kiel ( email )

P.O. Box 4309
Kiel, D-24100
Germany

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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