Protection for Free? the Political Economy of U.S. Tariff suspensions
September 1, 2010
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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.
Subject: Expenditure, Housing, Imports, International trade, National accounts, Tariffs, Taxes, Trade policy
Keywords: firm level, Housing, Imports, lobbying expenditure, mover accent, opponent firm, political economy, political organization, proponent firm, tariff suspension, Tariffs, trade policy, WP
Pages:
48
Volume:
2010
DOI:
Issue:
211
Series:
Working Paper No. 2010/211
Stock No:
WPIEA2010211
ISBN:
9781455205424
ISSN:
1018-5941
