(2008), with Julien Vauday, CES Working paper 2008-36
This paper builds on Grossman and Helpman (1994) and develops a political economy framework to examine the endogenous implementation of Technical Barriers to Trade. These barriers, as every domestic regulation, have also to be borne by domestic producers. The higher cost they imply may induce firms to lobby against the implementation of such barriers. On the other hand, highly productive firms may benefit from these regulations because of the weaker competition they imply. Those barriers are thus able to create conflicts of interests within sectors. In this paper, intra-sectoral firm heterogeneity is the unique driving force of the political game and competition among lobbies. We show that the political competition opposes productive versus non productive firms rather than domestic versus foreign one, contrasting with the literature. As a consequence, the correlation between protection and lobbies contributions may actually be negative.