Abstract
This paper estimates the potential social cost of trade barriers using the Harberger and the Tullock/Posner approaches for a sample of U.S. food and tobacco manufacturing industries. In addition, it tests the relationship between the computed welfare losses and special-interest political activity (PAC contributions). If all rents were dissipated through rent seeking, the social cost of trade barriers would be about 12.5 percent of domestic consumption and would be particularly large for sugar and milk products where quotas are the main instrument of protection. Furthermore, the results indicate that welfare losses are positively associated with industry lobbying but the strength of such association is strongly dependent on industry concentration.
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The authors are grateful to Zhikang You for research support and to Dorine Nagy for secretarial assistance. Partial support for this research was provided by the Storrs Agricultural Experiment Station, the Food Marketing Policy Center, and the University of Connecticut Research Foundation. This is Storrs Agricultural Experiment Station Contribution No. 1449.
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Lopez, R.A., Pagoulatos, E. Rent seeking and the welfare cost of trade barriers. Public Choice 79, 149–160 (1994). https://doi.org/10.1007/BF01047924
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DOI: https://doi.org/10.1007/BF01047924