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Spurious Injury as Indirect Rent Seeking: Free Trade Under The Prospect of Protection

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  • Leidy, M.P.
  • Hoekman, B.M.

Abstract

In the literature on directly unproductive profit seeking or rent seeking, intervention‐seeking by labor and industry groups is generally restricted to direct lobbying activity. However, import‐competing producers may have an additional instrument to influence the decision to grant protection. Under well‐established injury criteria for protection import‐competing producers have an incentive, either collectively or individually, to feign injury. To the extent that the free‐rider problem can be overcome, orchestrating the appearance of injury is an intervention‐seeking activity that may be complementary to DUP lobbying. When the established indicators of industry well‐being include variables controlled by the prospective beneficiaries, therefore, free trade under the prospect of protection is potentially accompanied by a concomitant spurious‐injury distortion. Some of the positive and welfare implications of the theory of spurious injury are investigated in both a partial equilibrium framework and in the Heckscher‐Ohlin model.
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Suggested Citation

  • Leidy, M.P. & Hoekman, B.M., 1991. "Spurious Injury as Indirect Rent Seeking: Free Trade Under The Prospect of Protection," Working Papers 273, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:273
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    Cited by:

    1. Bernard Hoekman, 2004. "Policies Facilitating Firm Adjustment to Globalization," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 457-473, Autumn.
    2. Schuknecht, Ludger & Stephan, Joerg, 1994. "EC Trade Protection Law: Produmping or Antidumping?," Public Choice, Springer, vol. 80(1-2), pages 143-156, July.
    3. Michael P. Leidy, 1994. "Trade Policy And Indirect Rent Seeking: A Synthesis Of Recent Work†," Economics and Politics, Wiley Blackwell, vol. 6(2), pages 97-118, July.
    4. David Godsell & Michael Welker & Ning Zhang, 2017. "Earnings Management During Antidumping Investigations in Europe: Sample‐Wide and Cross‐Sectional Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 55(2), pages 407-457, May.
    5. Greaney, Theresa M., 1999. "Manipulating market shares: The indirect effects of voluntary import expansions (VIEs)," Japan and the World Economy, Elsevier, vol. 11(1), pages 95-113, January.
    6. Angelika Eymann & Ludger Schuknecht, 1996. "Antidumping Policy In The European Community: Political Discretion Or Technical Determination," Economics and Politics, Wiley Blackwell, vol. 8(2), pages 111-131, July.
    7. Patrice Cassagnard, 2009. "Antidumping, Social Quality of Goods and Smear Campaign," Working Papers hal-01880359, HAL.
    8. Patrice CASSAGNARD, 2009. "Antidumping, Social Quality of Goods and Smear Campaign," Working Papers 10, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2009.
    9. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
    10. Ling Wei Chung & James C. Hartigan, 2005. "Dumping in a Linder Model of Trade with Multiple Retail Channels," Review of Development Economics, Wiley Blackwell, vol. 9(3), pages 325-342, August.
    11. Aksel Erbahar & Yuan Zi, 2015. "Cascading Trade Protection: Theory and Evidence from the U.S," CTEI Working Papers series 04-2015, Centre for Trade and Economic Integration, The Graduate Institute.
    12. Patrice Cassagnard, 2009. "Antidumping, Social Quality of Goods and Smear Campaign," Working papers of CATT hal-01880359, HAL.
    13. Erbahar, Aksel & Zi, Yuan, 2017. "Cascading trade protection: Evidence from the US," Journal of International Economics, Elsevier, vol. 108(C), pages 274-299.
    14. Philippe Kohler & Michael O. Moore, 2001. "Injury‐Based Protection with Auditing under Imperfect Information," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 42-59, July.

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    Keywords

    free trade ; competition;

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