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Protection for Sale in the EU

Author

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  • Marianna Belloc
Abstract
This paper presents estimation of the Grossman-Helpman (1994) model for the EU. We try to address a number of pitfalls that surround the previous empirical literature. First, we suggest a new identification strategy that enables to single out politically organized sectors with specific regard to trade policy. Second, we utilize two alternative measures of trade protection (ad-valorem equivalent of non-tariff barriers and overall restrictiveness) and adopt industrial and trade data at a high level of disaggregation. Finally, we directly obtain the structural coefficients of the model by estimating a nonlinear simultaneous equations system that is tightly linked to theory. We find that the theoretical model is broadly consistent with data and conclusions turn out internally coherent.

Suggested Citation

  • Marianna Belloc, 2007. "Protection for Sale in the EU," Working Papers in Public Economics 100, Department of Economics and Law, Sapienza University of Roma.
    • Handle: RePEc:sap:wpaper:wp100
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    References listed on IDEAS

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    2. Giovanni Facchini & Johannes Van Biesebroeck & Gerald Willmann, 2006. "Protection for sale with imperfect rent capturing," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(3), pages 845-873, August.
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    4. Devashish Mitra & Dimitrios D. Thomakos & Mehmet Ulubaşoğlu, 2016. "Can we obtain realistic parameter estimates for the ‘protection for sale’ model?," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 10, pages 175-198, World Scientific Publishing Co. Pte. Ltd..
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    11. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Protection for sale or surge protection?," European Economic Review, Elsevier, vol. 53(6), pages 675-688, August.
    12. Kelejian, Harry H., 1982. "An extension of a standard test for heteroskedasticity to a systems framework," Journal of Econometrics, Elsevier, vol. 20(2), pages 325-333, November.
    13. Francois, Joseph & Nelson, Douglas & Pelkmans-Balaoing, Annette, 2008. "Endogenous Protection in General Equilibrium: Estimating Political Weights in the EU," CEPR Discussion Papers 6979, C.E.P.R. Discussion Papers.
    14. By Kishore Gawande & Pravin Krishna & Marcelo Olarreaga, 2012. "Lobbying Competition Over Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 115-132, February.
    15. Marianna Belloc & Paolo Guerrieri, 2008. "Special Interest Groups and Trade Policy in the EU," Open Economies Review, Springer, vol. 19(4), pages 457-478, September.
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    17. Baybars Karacaovali & Nuno Limão, 2018. "The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 14, pages 373-401, World Scientific Publishing Co. Pte. Ltd..
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    19. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoğlu, 2016. "“Protection For Sale” In A Developing Country: Democracy Vs. Dictatorship," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 9, pages 163-174, World Scientific Publishing Co. Pte. Ltd..
    20. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, University Library of Munich, Germany.
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    22. Kishore Gawande, 1998. "Comparing Theories Of Endogenous Protection: Bayesian Comparison Of Tobit Models Using Gibbs Sampling Output," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 128-140, February.
    23. Belfrage, Carl-Johan, 2004. "Special Interest Politics and Trade Policy – An Empirical Challenge," Working Papers 2005:31, Lund University, Department of Economics.
    24. Leamer, Edward E., 1990. "Latin America as a target of trade barriers erected by the major developed countries in 1983," Journal of Development Economics, Elsevier, vol. 32(2), pages 337-368, April.
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    Cited by:

    1. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Is protection really for sale? A survey and directions for future research," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 181-191, March.
    2. Saha, Amrita, 2019. "Trade policy & lobbying effectiveness: Theory and evidence for India," European Journal of Political Economy, Elsevier, vol. 56(C), pages 165-192.

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    More about this item

    Keywords

    Trade policy; European Union; Lobbying; Political economy; SimultaneousEquations Models.;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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