Protection for Free? the Political Economy of U.S. Tariff suspensions

By Prachi Mishra, Rodney D. Ludema, Anna Maria Mayda

September 1, 2010

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Prachi Mishra, Rodney D. Ludema, and Anna Maria Mayda. Protection for Free? the Political Economy of U.S. Tariff suspensions, (USA: International Monetary Fund, 2010) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/211
Stock No:

WPIEA2010211
ISBN:

9781455205424
ISSN:

1018-5941

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