Lobby interaction and trade policy

Abstract

The paper introduces lobby interaction in the ''protection for sale'' framework. Special interest groups provide unconditional contributions where the marginal contribution of a lobby is decreasing in the total sum collected by the government. In contrast to the ''protection for sale'' model, for a given proportion of capital owners in the organized sectors, an increase in the number of lobbies has an impact on trade policy. It is also shown that an increase in the number of lobbies has two opposite effects on each lobby's contribution: a competition effect which lowers a lobby's contribution and a political influence effect which tends to increase its contribution.