Lobbying as a Private Good with Intra-Industry Trade

• Published in: International studies quarterly 1997-09, Vol.41 (3), p.455-474
• Main Author: Gilligan, Michael J.
• Format: Article
• Language: English
• Subjects: ALL OR MOST INDUSTRY; Collective action problem; Consumer economics; Economic Theory; Imports; Industry; Internal trade; INTERNATIONAL ECONOMICS; International political economy; International Trade; International Trade Commission; Lobby; Lobbying; Monopolistic competition; PRESSURE GROUP; Private goods; Protectionism; Tariffs; Trade; Trade adjustment; Trade barriers; Trade negotiation; Trade policy
• ISSN: 0020-8833; 1468-2478
• DOI: 10.1111/0020-8833.00052

Intra-industry trade-trade in different varieties of the same product between countries with similar factor endowments-has been an important and surprising feature of the postwar international economy. Economists have explained this trade with models of monopolistic competition, which suggest that intra-industry trade does not have the stark distributional consequences that the more traditional "endowments-based" trade does. I do not dispute that claim here, although I do dispute a political implication drawn from it-that intra-industry trade produces less political action than endowments-based trade. I argue that, because firms involved in intra-industry trade are monopolists, lobbying essentially becomes a private good. If intra-industry trade places costs on firms, they do not have less incentive to take political action to stop it, as the conventional wisdom suggests. I provide evidence for this contention from complaints lodged with the International Trade Commission. The results show that the higher the degree of intra-industry trade the more likely an industry will request protection from the ITC.