Entry and Asymmetric Lobbying: Why Governments Pick Losers / Richard E. Baldwin, Frederic Robert-Nicoud.

Format:

Book

Author/Creator:

Baldwin, Richard E.

Contributor:

National Bureau of Economic Research.

Robert-Nicoud, Frederic.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8756.

NBER working paper series no. w8756

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Entry and Asymmetric Lobbying

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

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.

Notes:

Print version record

January 2002.