Working Paper: NBER ID: w29120
Authors: Matilde Bombardini; Olimpia Cutinelli Rendina; Francesco Trebbi
Abstract: This chapter investigates the non-market response of firms to international trade shocks increasing the level of competition in U.S. industries. Lobbying expenditures increase as a consequence of import changes related to the China shock. The effect on lobbying is not homogeneous across firms and it concentrates particularly in those producers which are behind the technological frontier. We discuss theoretical mechanisms driving lobbying of firms away from the technological frontier: not only the cost-benefit trade-off between innovation and lobbying is relatively less appealing for low productivity firms, but the collective action ability of low productivity firms improves after a competitive shock.
Keywords: No keywords provided
JEL Codes: D72; P48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Heightened competition from Chinese imports (F69) | Increase in lobbying activities (D72) |
| Import changes related to the China shock (F69) | Increase in lobbying expenditures (D72) |
| Competitive shocks (L19) | Greater propensity to lobby among low productivity firms (D22) |
| Cost-benefit tradeoff between innovation and lobbying (O36) | Less favorable for low productivity firms (D22) |
| Improvement in collective action (D70) | Increase in lobbying activities (D72) |