NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Entry and Asymmetric Lobbying: Why Governments Pick Losers

Richard E. Baldwin, Frederic Robert-Nicoud

NBER Working Paper No. 8756
Issued in January 2002
NBER Program(s):   ITI

Governments frequently intervene to support domestic industries, but a surprising amount of this support goes to ailing sectors. We explain this with a lobbying model that allows for entry and sunk costs. Specifically, policy is influenced by pressure groups that incur lobbying expenses to create rents. In expanding industry, entry tends to erode such rents, but in declining industries, sunk costs rule out entry as long as the rents are not too high. This asymmetric appropriablity of rents means losers lobby harder. Thus it is not that government policy picks losers, it is that losers pick government policy.

download in pdf format
   (319 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8756

Published: Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Entry and Asymmetric Lobbying: Why Governments Pick Losers," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 1064-1093, 09. citation courtesy of

Users who downloaded this paper also downloaded* these:
Helpman and Persson w6589 Lobbying and Legislative Bargaining
Bombardini and Trebbi w14771 Competition and Political Organization: Together or Alone in Lobbying for Trade Policy?
de Figueiredo and Figueiredo w8981 The Allocation of Resources by Interest Groups: Lobbying, Litigation and Administrative Regulation
Baldwin and Jaimovich w16084 Are Free Trade Agreements Contagious?
de Figueiredo and Tiller w7726 The Structure and Conduct of Corporate Lobbying: How Firms Lobby the Federal Communications Commission
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us