Collusion, Collective Action and Protection: Theory and Evidence

Richard Damania, Per Fredriksson and Thomas Osang ()

Public Choice, 2004, vol. 121, issue 3, 279-308

Abstract: This paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors. Thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying. We show that greatercollusion reduces firm contributionsto tariff lobbying, when the governmentvalues welfare sufficiently and thecross-price elasticity between the domesticand foreign goods is sufficiently high. The empirical evidence from the U.S.supports the theory. Greater collusionreduces the level of PAC contributions. Copyright Kluwer Academic Publishers 2004

Date: 2004
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DOI: 10.1007/s11127-004-1679-x

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