Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98373
Authors: 
Endoh, Masahiro
Year of Publication: 
2005
Series/Report no.: 
Center Discussion Paper 915
Abstract: 
This paper examines the effects of lobbying activities across international borders, on determining each country’s import tariff in a multi-principal, multi-agent, menu-auction model. Cross-border political donations could promote international policy cooperation because of two of their distinctive characteristics. First, special interest groups use cross-border donations as tools to wield their influence on ruling parties of other countries directly, which promotes efficiency of policy formation. Second, for ruling parties of countries, cross-border donations make them take into account the impact of their policy on other countries, which makes them more sensitive to other countries’ welfare and, therefore, more cooperative with others. When ruling parties estimate the worth of political contributions from national special interest groups and from foreign lobbying groups with the same weight, Pareto-efficient tariffs are attained at which world welfare is maximized.
Subjects: 
Cross-border Donations
Truthful Equilibrium
Pareto-Efficient Tariffs
JEL: 
D72
F13
H21
P48
Document Type: 
Working Paper

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