Simple measures of endogenous free-riding in protectionist lobbies

Stephen Magee, Hak Loh Lee, Hongshik Lee

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Even though there is a well-known empirical and theoretical link between lobby and the free-rider problem, the existing literature only attributes its findings to the free-rider rather than the measurement of its extent. We develop broader theoretical micro-foundations for measuring free-riding and investigate the determinants of tariff rates from the perspective of corporate lobbying and free-riding. Our estimation result shows that the degree of free-riding not only varies across industries but is particularly high in larger industries indicating the underutilization of lobbying. The tariff rates under monopoly are about 8 times higher than under perfect competition in most industries suggesting that stakeholders should maintain higher industry protection levels through lobbying.

Original languageEnglish
Pages (from-to)324-333
Number of pages10
JournalEconomic Modelling
Volume60
DOIs
Publication statusPublished - 2017 Jan 1

Keywords

  • Free-rider problem
  • Lobbying
  • Tariffs

ASJC Scopus subject areas

  • Economics and Econometrics

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