Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72401
Authors: 
Thede, Susanna
Year of Publication: 
2005
Series/Report no.: 
Working Paper Series, UCD Centre for Economic Research 05/19
Abstract: 
In this paper, trade policy formation is incorporated into an economic geography model. The political setup used is a modified version of that introduced by Grossman and Helpman (1994) in which policy makers may be influenced by lobbying contributions. On the basis of the underlying trade framework, lobbying activity is performed in benefit of capital interests. Optimal policy outcomes indicate that the largest countries and countries that are disadvantaged by trade regulation favour trade liberalisation. Moreover, the optimal domestic policy is more open to trade when the local and global competition facing domestic firms is less fierce, the welfare dependency on manufacturing imports is larger and when there is a more intense preference for variety in consumption. It is shown that lobbying influence on policy is increasing in the concentration of capital ownership in the population. It is also revealed that, in the cases when domestic special and general interests do not coincide, lobbying activity is performed to liberalise trade. In addition, this actually implies that the presence of lobbying influence on policy raises the long-run national welfare.
Subjects: 
Economic Geography
International Specialisation
NationalWelfare
Lobbying Contributions
Market Access Reciprocity
JEL: 
D72
F12
F13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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