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Interest Groups and Trade Policy - Gene M. Grossman

Interest Groups and Trade Policy

Paperback Published: 3rd March 2002
ISBN: 9780691095974
Number Of Pages: 272

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Gene Grossman and Elhanan Helpman are widely acclaimed for their pioneering theoretical studies of how special interest groups seek to influence the policymaking process in democratic societies. This collection of eight of their previously published articles is a companion to their recent monograph, "Special Interest Politics." It clarifies the origins of some of the key ideas in their monograph and shows how their methods can be used to illuminate policymaking in a critical area.

Following an original introduction to the contents of the book and its relationship to "Special Interest Politics," the first three chapters focus on campaign contributions and candidate endorsements--two of the tools that interest groups use in their efforts to influence policy outcomes. The remaining chapters present applications to trade policy issues. Grossman and Helpman demonstrate how the approaches developed in their monograph can shed light on tariff formation in small and large countries, on the conduct of multilateral trade negotiations, and on the viability of bilateral free trade agreements. They also examine the forms that regional and multilateral trade agreements are likely to take and the ways in which firms invest abroad to circumvent trade barriers induced by political pressures.

The articles collected in this volume are required reading for anyone interested in international relations, trade policy, or political economy. They show why Grossman and Helpman are global leaders in the fields of international economics and political economy.

Industry Reviews

"These readings showcase Grossman and Helpman's contributions to our understanding of how lobbying and interest groups affect international trade policy. Many people will want to have this collection on their shelf."--Robert Feenstra, editor, Journal of International Economics

Introductionp. 1
Special Interest Politicsp. 2
Articles in this Collectionp. 7
Part I: Methodologyp. 7
Part II: Applications to Trade Policyp. 11
Empirical Validationp. 17
Referencesp. 21
Instruments of Influencep. 23
Common Agency and Coordination: General Theory and Application to Government Policy Making (with Avinash Dixit)p. 25
Introductionp. 25
General Theoryp. 28
Equilibriump. 28
Truthful Equilibriap. 32
Quasi-Linear Preferencesp. 34
Application to Government Policy Makingp. 35
Referencesp. 41
Electoral Competition and Special Interest Politicsp. 43
Introductionp. 43
Related Literaturep. 45
The Modelp. 47
The Votersp. 47
The Parties and the Governmentp. 49
The Special Interestsp. 50
Political Equilibriump. 52
Functional Formsp. 54
Equilibrium with One Lobbyp. 54
Contributions with Only an Influence Motivep. 56
When Is an Electoral Motive Operative?p. 59
Equilibrium with Several Lobbiesp. 61
Summaryp. 67
Appendixp. 69
Strict Majority Rulep. 69
Referencesp. 71
Competing for Endorsementsp. 73
The Literature on Political Endorsementsp. 77
The Model and a Benchmarkp. 79
A Neutrality Resultp. 84
Effective Endorsementsp. 85
Mechanical Endorsementsp. 86
Strategic Endorsementsp. 92
Welfarep. 95
Conclusionsp. 98
Appendixp. 100
Statement and Proof of Proposition 4p. 100
Proof of Proposition 5p. 104
Referencesp. 107
Trade Policyp. 109
Protection for Salep. 111
Overviewp. 114
Formal Frameworkp. 116
The Structure of Protectionp. 119
Political Contributionsp. 126
Why Lobbies May Prefer Trade Policiesp. 132
Summary and Extensionsp. 134
Referencesp. 136
Trade Wars and Trade Talksp. 139
Introductionp. 139
Model Outline and Relation to the Literaturep. 141
The Formal Modelp. 143
Trade Warsp. 147
Trade Talksp. 157
Conclusionsp. 168
Referencesp. 170
Politics and Trade Policyp. 173
Introductionp. 173
Political Economy Approachesp. 175
Direct Democracyp. 175
Political Support Functionp. 178
Tariff-Formation Functionp. 180
Electoral Competitionp. 184
Influence-Driven Contributionsp. 186
Double-Edged Diplomacyp. 191
Trade Warsp. 192
Trade Talksp. 193
Free Trade Agreementsp. 194
Referencesp. 197
The Politics of Free Trade Agreementsp. 199
Analytical Frameworkp. 201
Objectives of Economic and Political Agentsp. 202
The Political Gamep. 204
Economic Equilibria Under an FTAp. 205
Effects of an FTA on Economic Interestsp. 207
Unilateral Stancesp. 208
Equilibrium Agreementsp. 212
Industry Exclusionsp. 219
Unilateral Stancesp. 219
Bargaining over Industry Exclusionsp. 224
Conclusionsp. 228
Appendixp. 229
Contributions to Foreign Governmentsp. 229
Referencesp. 232
Foreign Investment with Endogenous Protectionp. 233
Introductionp. 233
Basic Modelp. 236
Consumption and Productionp. 237
The Special Interest Group and the Governmentp. 239
Multinationalsp. 242
DFI and Protectionp. 243
Tariff Response Curvesp. 243
Profit Differential Curvesp. 244
Entryp. 244
Equilibrium DFI and Protectionp. 246
Does DFI Benefit the Average Voter?p. 249
Workers Versus Capitalistsp. 251
Conclusionsp. 255
Referencesp. 255
Indexp. 257
Table of Contents provided by Publisher. All Rights Reserved.

ISBN: 9780691095974
ISBN-10: 0691095973
Audience: Tertiary; University or College
Format: Paperback
Language: English
Number Of Pages: 272
Published: 3rd March 2002
Publisher: Princeton University Press
Country of Publication: US
Dimensions (cm): 22.86 x 15.24  x 1.78
Weight (kg): 0.39