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Collusion, Collective Action and Protection: Theory and Evidence

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Abstract

This paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors. Thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying. We show that greatercollusion reduces firm contributionsto tariff lobbying, when the governmentvalues welfare sufficiently and thecross-price elasticity between the domesticand foreign goods is sufficiently high. The empirical evidence from the U.S.supports the theory. Greater collusionreduces the level of PAC contributions.

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Authors and Affiliations

  1. University of Adelaide, U.S.A

    Richard Damania

  2. Department of Economics, Southern Methodist University, Dallas, TX, 75275-0496, U.S.A.

    Per G. Fredriksson

  3. Southern Methodist University, U.S.A>

    Thomas Osang

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  1. Richard Damania
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  2. Per G. Fredriksson
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  3. Thomas Osang
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Damania, R., Fredriksson, P.G. & Osang, T. Collusion, Collective Action and Protection: Theory and Evidence. Public Choice 121, 279–308 (2004). https://doi.org/10.1007/s11127-004-1679-x

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