Protection for Free? the Political Economy of U.S. Tariff suspensions
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Summary:
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.
Series:
Working Paper No. 2010/211
Subject:
Expenditure Housing Imports International trade National accounts Tariffs Taxes Trade policy
English
Publication Date:
September 1, 2010
ISBN/ISSN:
9781455205424/1018-5941
Stock No:
WPIEA2010211
Pages:
48
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