Premium
SPURIOUS INJURY AS INDIRECT RENT SEEKING: FREE TRADE UNDER THE PROSPECT OF PROTECTION *
Author(s) -
Leidy Michael P.,
Hoekman Bernard M.
Publication year - 1991
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.1991.tb00042.x
Subject(s) - spurious relationship , economics , rent seeking , incentive , welfare , distortion (music) , intervention (counseling) , profit (economics) , free rider problem , microeconomics , medicine , market economy , engineering , law , amplifier , cmos , machine learning , electronic engineering , psychiatry , politics , computer science , political science , public good
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.