Protection for Sale with Imperfect Rent Capturing
Structurally estimating the Grossman and Helpman (1994) model using coverage ratios that include non-tariff barriers leads to biased parameter estimates. We develop a "protection for sale" theoretical framework consistent with the data, by explicitly allowing for non-tariff barriers. Introducing partial rent capturing we obtain a testable specification which finds support in the data. Our results suggest that average rent capturing is in the order of 72-75 percent.
Published: Facchini, Giovanni, Johannes Van Biesebroeck and Gerald Willmann. "Protection for Sale with Imperfect Rent Capturing." Canadian Journal of Economics 39,3 (August 2006): 845-873.
This paper was revised on November 18, 2005