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Politically Imposed Entry Barriers

Author

Listed:
  • Paul H. Rubin

    (Emory University)

  • Mark A. Cohen

    (Vanderbilt University)

Abstract

The antitrust agencies analyze consequences of proposed mergers assuming that imports are constrained by existing quotas, a second-best approach. This policy is flawed. Quotas are endogenous. If a merger allows firms to reduce output, the quota will be increased. If an industry has sufficient political power to obtain subsidies from government then the authorities should assume that these subsidies will be reduced if market power increases. Paradoxically, for political entry barriers truly in the public interest, the antitrust authorities should take the barrier as given. We provide evidence of a large adjustment of tariffs to changes in market power.

Suggested Citation

  • Paul H. Rubin & Mark A. Cohen, 1992. "Politically Imposed Entry Barriers," Eastern Economic Journal, Eastern Economic Association, vol. 18(3), pages 333-344, Summer.
    • Handle: RePEc:eej:eeconj:v:18:y:1992:i:3:p:333-344
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume18/V18N3P333_344.pdf
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    References listed on IDEAS

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    1. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
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    6. Faith, Roger L & Leavens, Donald R & Tollison, Robert D, 1982. "Antitrust Pork Barrel," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 329-342, October.
    7. Landes, William M & Posner, Richard A, 1975. "The Independent Judiciary in an Interest-Group Perspective," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 875-901, December.
    8. Hazlett, Thomas W, 1992. "The Legislative History of the Sherman Act Re-examined," Economic Inquiry, Western Economic Association International, vol. 30(2), pages 263-276, April.
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    Cited by:

    1. Steven Globerman, 1990. "Trade liberalization and competitive behavior: A note assessing the evidence and the public policy implications," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 9(1), pages 80-88.

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    More about this item

    Keywords

    Firm; Government; Import; Merger; Policy; Political; Quotas; Subsidies;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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