Protectionist Lobbying and Strategic Investment

13 Pages Posted: 28 Aug 2003

See all articles by Richard Damania

Richard Damania

World Bank; University of Adelaide - School of Economics

Abstract

Why are some uncompetitive industry sectors so effective in lobbying for greater protection and support? This paper attempts to explain the lobbying success of these industries in terms of the strategic role of investment in technology as a credible commitment device. By eschewing potentially profitable investment opportunities firms credibly signal to the government that the cost of a tariff reduction will be substantial. This enables the firms to lobby more effectively for policy concessions. Political considerations may therefore provide a significant incentive for firms to reject investment in newer technologies, even when these lower production costs.

Suggested Citation

Damania, Richard, Protectionist Lobbying and Strategic Investment. Available at SSRN: https://ssrn.com/abstract=410975

Richard Damania (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

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