Optimal Endogenous Tariffs with Implicit Campaign Contributions

Abstract

This article proposes a model of endogenous protection by integrating informed and non-informed voters in the population. The model also distinguishes between interest groups and pressure groups, by considering that the members of one interest group do not necessarily organize as a pressure group (lobby). The endogenous tariff stemming from the model is an increasing function of the relative influence of the lobby, and the aforementioned function itself increases in accordance with the part of non-informed voters. This framework avoids formalizing contributions. It also permits to show that the conditions of the lobbying’s efficiency depend on the nature of the free rider comportment of the interest group members.