TY  - JOUR
AU  - Baldwin,Richard E.
AU  - Robert-Nicoud,Frederic
TI  - Entry and Asymmetric Lobbying: Why Governments Pick Losers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8756
PY  - 2002
Y2  - January 2002
UR  - http://www.nber.org/papers/w8756
L1  - http://www.nber.org/papers/w8756.pdf
N1  - Author contact info:
Richard Baldwin
Cigale 2
Lausanne Switzerland 1010
Tel: 41-22-908-5900
E-Mail: baldwin@graduateinstitute.ch
AB  - 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.
ER  -