Grossman and Helpman (1994) present a theory of endogenous protection by explicitly modeling government-industry interactions for which mere "black-box" models previously existed. They obtain a Ramsey pricing-type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities. On the lobbying side, the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection. The model not only makes for richer theory in terms of rigor and elegance, but its predictions are directly testable. Whether the Grossman-Helman model stands up to real-world data is investigated in this paper. Predictions from both the protection side and lobbying side are tested using cross-sectional U.S. nontariff barrier data. We also compare the "second-generation" Grossman-Helpman model with a more traditional specification. Our results call for serious consideration of this model in the political economy literature. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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This paper empirically examines the alternative posed by Richardson [J. Intern. Econ. 34 (1993) 39] to the traditional view that trade integration may exacerbate inefficiencies. Richardson's hypothesis boldly predicts that trade diversion (and trade creation) may actually cause tariffs to decline! The hypothesis is fundamentally attributable to the presence of a political component in the governments' objective functions. A cross-sectionally rich data set on trade and tariffs from the Mercosur-pact countries, primarily Argentina, is used. The evidence yields surprising conclusions about the validity of endogenous tariff determination in models of trade integration. D

In popular discussion, much has been made of the susceptibility of government policies to lobbying by foreigners-the general presumption being that this is harmful to the home economy. However, in a trade policy context this may not be the case. If the policy outcome absent any foreign lobbying is characterized by welfare-reducing trade barriers, foreign lobbying may reduce such barriers and possibly raise welfare. Using a new data set on foreign political activity in the United States, this paper investigates this question empirically. Tariffs and nontariff barriers are both found to be negatively related with foreign lobbying activity. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.