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Cost difference and endogenous lobbying position in intra-industry trade

Authors Qiu, Larry Dongxiao
Issue Date 2003-01
Summary A two-country, two-firm model has been developed to study equilibrium lobbying positions in intra-industry trade under cost uncertainty. A firm chooses either a protect ionist position or a free-t rader position. The model predicts that taking the free-trader (protectionist) lobbying position is an effi cient (inefficient) firm's dominant strategy. In addit ion, for any lobbying position taken by a firm, its lobbying effort always decreases as its production cost increases. The findings help shed light on some empirical observations.
Language English
Format Working paper
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