collusion collective action and protection theory and evidence this paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying we show that greatercollusion reduces firm contributionsto tariff lobbying when the governmentvalues welfare sufficiently and thecross price elasticity between the domesticand foreign goods is sufficiently high the empirical evidence from the u s supports the theory greater collusionreduces the level of pac contributions

stock returns before and after calls of convertible bonds ofer and natarajan 1987 report negative statistically significant cumulative average abnormal returns over five years following convertible bond calls we show that these results are obtained only if returns preceding the call dates are used for market model parameter estimation returns preceding calls tend to be positive and unusually large this means that predicted post call returns based on pre call parameter estimates are biased upward consequently the corresponding abnormal returns are biased downward we also discuss a corrected test statistic we conclude that the evidence does not indicate market inefficiency in the stock price reaction to convertible calls

campaign contributions and congressional voting a simultaneous probit tobit model m any citizens and scholars have been troubled by the influence that special interest groups appear to exert over policymaking as a result of their roles in the financing of political campaigns these concerns inspired the enactment of a number of election law reforms in the 1970s and have led to increasing popular support for public financing of electoral campaigns despite the public attention these issues have attracted few social scientists have attempted to analyze the financial relationships between interest groups and policymakers empirically 1 one such study was reported by durden and silberman 1976 who included contributions from the afl cio political action committee as an independent variable in an equation explaining congressional voting on minimum wage legislation their results indicated that campaign contributions significantly affected voting on that issue the work i have done differs substantially from that of durden and silberman in two ways first i have chosen to examine issues which were of considerably narrower concern than the minimum wage issue in the interest of simplicity i examine issues of concern to just one or a few groups i have also used a different econometric technique if campaign contributions are actually endogenous as seems plausible the single equation estimation technique employed by durden and silberman is subject to a possible simultaneous equations bias for each issue studied i have therefore jointly estimated a two equation system explaining both votes on the bill and contributions from an associated interest group the simultaneous probit tobit model which i use takes into account the dichotomous nature of the variable indicating a congressman s vote the non negativity constraint imposed on the contribution variable and the possibility of correlation between the error terms for the equations explaining these two variables 2 full information maximum likelihood fiml estimates for the model are consistent and asymptotically efficient

strength in numbers group size and political mobilization abstract an important result in interest group theory and political economy is that small groups are more influential than their size would lead us to expect in this study we document that the opposite holds for political mobilization citizens are more likely to participate in elections if they belong to large groups we present evidence that both the absolute size of groups and their population share influence individual participation decisions the link between group size and political mobilization is in part due to the structure of media markets candidates find it easier to direct campaign messages at larger groups because many existing media outlets cater to them

is protection for sale evidence on the grossman helpman theory of endogenous protection 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

vote buying supermajorities and flooded coalitions in a recent paper banks 2000 adopting the framework of our model groseclose and snyder 1996 derives several new and noteworthy results in addition he provides a counterexample to our proposition 4 here we explain the error in our proposition but note that we can correct it easily if we invoke an additional assumption in equilibrium the winning vote buyer constructs a nonflooded coalition that is she does not bribe every member of her coalition we conclude with a brief discussion of the substantive implications of banks s proposition 1 we note that it provides additional support for our general claim that minimal winning coalitions should be rare in a vote buying game

endogenous trade policy through majority voting an empirical investigation abstract the median voter approach to trade policy determination within a heckscher ohlin framework as in mayer am econ rev 74 5 1984 970 predicts that an increase in inequality holding constant the economy s overall relative endowments raises trade barriers in capital abundant economies and lowers them in capital scarce economies we find support for this prediction using cross country data on inequality capital abundance and diverse measures of protection we perform certain robustness checks that include controlling for the effects of political rights and schooling as well as using alternative datasets on factor endowments

the value of trade agreements in the presence of political pressures an argument often heard in favor of trade agreements is that by committing to free trade a government can credibly distance itself from domestic lobbies but several existing models of endogenous protection suggest that governments have no interest in foreclosing interest group pressures since governments derive rents from the political process we develop a small country model in which factors are sector specific in the short run but mobile in the long run we show that in this setting a government may be worse off in the political equilibrium than under commitment to free trade and hence it may value a trade agreement

protection for sale the case of oligopolistic competition and interdependent sectors in grossman helpman s 1994 canonical protection for sale pfs model political competition among industry lobbies is driven purely by their interests as consumers this paper introduces demand linkages and oligopolistic competition into the pfs framework to address the rivalry among lobbies stemming from product substitutability it shows that increased substitutability weakens the interest groups incentives to lobby and reduces tariff distortions this may explain why empirical tests of pfs find surprisingly little impact of lobbies on the government s trade policy decision the paper also analyzes endogenous lobby formation suggesting that demand linkages may adversely affect the industry decision to organize resume proteger les ventes le cas de la concurrence oligopolistique et des secteurs interdependants dans le modele canonique de grossman helpman 1994 protection for sale pfs la concurrence politique entre lobbyistes est purement alimentee par leurs interets en tant que consommateurs ce texte presente dans ce cadre d analyse les enchainements de la demande et la concurrence oligopolistique pour prendre en compte la rivalite entre lobbyistes qui derive de la substituabilite des produits on montre qu une substituabilite accrue reduit l incitation des groupes d interets a faire du lobbying et reduit les distorsions tarifaires cela peut expliquer pourquoi les tests empiriques du modele pfs ont decouvert un impact etonnamment faible des lobbies sur les decisions des gouvernements dans le monde des politiques commerciales le texte analyse aussi la formation endogene des lobbies suggerant que les enchainements de la demande peuvent affecter negativement la decision de s organiser

estimation with censored regressors basic issues we study issues that arise for estimation of a linear model when a regressor is censored we discuss the efficiency losses from dropping censored observations and illustrate the losses for bound censoring we show that the common practice of introducing a dummy variable to correct for censoring does not correct bias or improve estimation we show how censored observations generally have zero semiparametric information and we discuss implications for estimation we derive the likelihood function for a parametric model of mixed bound independent censoring and apply that model to the estimation of wealth effects on consumption

forest management conservation and global timber markets this article develops a global timber market model which captures how timber supply reacts to future predicted increases in the demand for timber higher future demand is expected to increase prices increase investments in regeneration increase establishment of plantations and expand output dynamic market responses imply a greater reliance on plantations in productive regions allowing large areas of natural forest in low valued regions to remain largely intact sensitivity analysis suggests that price harvest and management are most sensitive to the rate of demand increase the interest rate the cost of plantations and access costs of natural forests two forest conservation strategies are examined which predict the system wide implications of forest conservation in europe and north america the policies indicate that whereas set asides can induce net conservation harvests increase elsewhere particularly in natural forests

calls of warrants timing and market reaction this paper examines the timing of and reaction to calls of callable warrants three main findings emerge first unlike convertible bonds or preferred stock callable warrants are called almost as soon as possible second there is a negative price reaction of about 3 percent when a call is announced finally at the completion of a call the stock price rebounds by an average of 7 percent the total reaction from announcement through completion of the call is a positive excess return of about 4 percent since 1980 several hundred firms have issued callable warrants typically these warrants become callable only after a predetermined date and only when the price of the underlying stock exceeds a minimum price for a prespecified number of days if the company then calls warrantholders are allotted a notice period usually 30 days to decide whether to exercise their warrants or accept a nominal call price this paper is the first to study market reaction to calls of warrants and to see if firms delay calls the results indicate that warrants are called almost as soon as exercise can be forced at the announcement of a call stock prices fall about 3 percent however they rebound by about 7 percent around the last day that warrants can be exercised because this date is known in advance this result is not expected in an efficient market the investigation of calls of warrants may provide insights into calls of convertible bonds and preferred stock both calls of warrants and calls of convertibles transfer wealth to stockholders by reducing the life of the other securityholder s options so if management tries to maximize shareholder wealth management s incentive to call warrants may resemble their incentive to call convertible securities 1 however in contrast to the results pre

evidence and explanation for the tariff lobbying paradox endogenous tariffs fall as protectionist lobbying rises recent empirical evidence suggests that u s protectionist lobbying expenditures rose while u s trade barrier fell we find that the same result holds in our panel data sample from 28 countries be

information access and contributions a signaling model of lobbying interest groups pay monetary contributions to gain access and provide information to a policymaker if their interests are aligned with those of the policymaker s constituency they have costless access and report their private information truthfully if their interests conflict they are forced to pay a strictly positive contribution in order to enhance the credibility of their reports the policymaker bases her policy decision on the competing reports and the size of the contributions accompanying these reports the interest groups contribution decisions are plagued by a free rider problem i derive the implications of this problem for the size and pattern of contributions and for the degree of information aggregation

liquidity costs and stock price response to convertible security calls firms announcements to call in the money convertible securities for redemption essentially force their conversion into common stock and such announcements are generally met with significant reductions in the calling firms equity values an explanation based on liquidity costs is advanced and tested the explanation implies that investors who choose to sell their shares early in the conversion period bear liquidity costs by selling at reduced prices consistent with the explanation the average share price decline is short lived lasting most of the conversion period thus a component of the call announcement effect appears to be due to liquidity costs copyright 1992 by university of chicago press

political economy information and incentives abstract this paper shows how the instruments of incentive theory can be used to develop some views about the proper design of governments to avoid the capture of politicians and bureaucrats by interest groups first treating politicians as informed supervisors to whom economic policy is delegated we show the usefulness of the separation of powers to increase the transaction costs of collusion the relevance of asymmetric control for avoiding reciprocal favors the incompleteness of the constitutional contract leaves discretion to politicians who become residual decision makers we study the trade offs between greater efficiency obtained by allowing powerful instruments to politicians and less discretion by restricting on the contrary those instruments determinants of those trade offs are the variability of the environment the extent of asymmetric information about tastes and technologies and the size of majorities finally we show the new theory of incentives for group behavior can be used to determine the transaction costs of collusion under asymmetric information and to which extent these costs relax the constraints imposed on government by collusive behavior

lobbying and agricultural trade policy in the united states the authors study whether political campaign contributions influence agricultural protection in the united states in the manner suggested by the political economy model of grossman and helpman 1994 this is the first attempt to test this model using agricultural data the authors test the model using a detailed cross sectional data set of agricultural protection subsidies and political action committee pac contributions in the late 1990s the model is qualitatively affirmed by the data they make a novel attempt to solve a puzzle about the model s quantitative implications also found in recent studies this solution makes the simple model consistent with the complicated decisionmaking process in real world government the results imply the underpinnings of a political economy equilibrium that will be hard to dislodge

campaign contributions and congressional voting does the timing of contributions matter theoretical and empirical studies do not address whether campaign contributions from more than one election cycle are important for congressional voting behavior further they do not address whether campaign contributions from different periods have different effects on legislative voting behavior this paper analyzes the cumulative effect of campaign contributions over two time periods moreover this paper studies the importance of the timing of contributions for legislative voting behavior ten roll call votes on price supports and quotas for various farm commodities in 1981 and 1985 are analyzed most of the estimated contribution coefficients are statistically significant the results show that without campaign contributions farm interest would have lost in five of the seven votes that were won moreover contributions that were given at approximately the same time as the vote have a larger impact on voting behavior than contributions that the legislator received one or two years prior to the vote copyright 1995 by mit press

tax shields sample selection bias and the information content of conversion forcing bond calls the information content of conversion forcing bond calls depends on the after tax cash flow to bondholders if the dividend after conversion exceeds the after tax coupon but is less than the before tax coupon the call reveals unanticipated decreases in dividends and or earnings that reduce the tax shield from interest payments in contrast a call when the dividend is less than the after tax coupon reveals the timing of an anticipated shift from exceptional firm specific positive growth to the industry norm efforts to document properties of convertible calls are subject to sample selection bias because calls are disproportionately associated with positive pre call firm specific growth brennan and schwartz 1977 1980 and ingersoll 1977a show that if capital markets are perfect the optimal policy is to call and force conversion the first time the bond s conversion value exceeds its cash redemption value however ingersoll 1977b 1 and constantinides and grundy 1987 provide evidence that firms delay calling convertible debt and mikkelson 1980 1981 ofer and natarajan 1987 and singh cowan and nayar 1990 document a statistically significant negative return to equity at the call announcement to explain these results which are inconsistent with the optimal call policy and its predicted effect on equity value in a perfect capital market several asymmetric information hypotheses have been put forth mikkelson 1981 1985 hypothesizes that the negative market reaction results from the market inferring that management expects a decline in the present value of the debt s tax shield possibly due to a decline in future earnings this suggests that managers refrain from calling due to the tax shields provided by the debt harris and raviv 1985 present a signaling model in which a

the optimal distribution of pollution rights in the presence of political distortions a critical issue in designing a system of tradable emission permits concerns the distribution of the initial pollution rights the purpose of this paper is to investigate how the initial rights should be optimally set when the determination of the number of tradable permits is subject to the influence of interest groups according to the coase theorem in the case where there are low transaction costs the assignment of the initial rights does not affect the efficiency of the final resource allocation in the presence of political pressure we show that the distribution of the initial rights has a significant effect on social welfare in contrast to the conventional results we find that grandfathered permits may be more efficient than auctioned permits even after taking into consideration the revenue recycling effect

new evidence on the valuation effects of convertible bond calls this study examines the wealth effects of convertible bond call announcements on stock holders straight bondholders and called and non called convertible debtholders we docu ment that forced conversions are associated with a significant loss in firm value the results suggest that convertible call announcements can trigger both negative signal and wealth transfer effects we show that at least part ofthe negative effect on stock prices results from wealth transfer to straight bondholders our analysis also lends empirical validity to the common contention that called convertible bondholders suffer wealth expropriation due to the elimination ofthe premium the wealth effect on non called convertible debtholders is insignificant cross sectional analysis reveals that the negative signal effect is important in explaining bond stock and firm excess returns finally we present evidence that refutes the notion that bonds are called to relieve the firm from restrictive debt covenants

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

the cotton influence index an examination of u s cotton subsidies given the lack of a bill or amendment specific to cotton we introduce a cotton influence index to capture legislators influence in championing the cause of the cotton growers during the hearings of the farm security and rural investment act of 2002 regression analyses reveal a relationship between cotton influence index and campaign contributions cotton farmland party affiliation and ideology tobit analysis indicates a significant relationship between different actions and participations by representatives to advance the interest of cotton that is components of this index and their future cotton political action committees pacs contributions to them copyright 2006 oxford university press

net campaign contributions agricultural interests and votes on liberalizing trade with china we consider the potential influence of contributions from interest groups to political rivals in the voting behavior of us legislators on international trade policy issues our application addresses the determinants of the permanent normal trade relations with china decision and focuses particular attention on the agriculture agribusiness lobby a simultaneous voting net contributions model suggests that these contributions were very effective relative to organized labor and other corporate groups despite their relatively small dollar value possible explanations arising from differences in targeting strategies are explored

international timber markets and tropical deforestation the evidence from prices some scholars suggest that global timber markets especially those involving high value species are a leading cause of tropical deforestation despite limited empirical evidence this hypothesis rests on the assumption that global timber markets respond to a common equilibrating mechanism that provides strong enough incentives for loggers in the tropical regions of the world this article develops a simple model and taps into a unique data set on timber prices of hardwood and softwood in leading markets to test the global timber markets hypothesis while we find evidence of a global equilibrating mechanism with potentially significant economic incentives to affect tropical deforestation our results do not endorse the common conjecture in the literature that timber price shocks in developed countries lead to a homogeneous response in terms of deforestation everywhere in the tropical world instead they invite further development of structural global timber market models to assess the linkages between ma

trade policies economic growth and the direct causes of deforestation by ramon lopez gregmar i galinato please send correspondence to ramon lopez 2200 symons hall university of maryland college park md 20742 email rlopez arec umd edu tel 301 405 1281 fax 301 314 9091 gregmar i galinato 2200 symons hall university of maryland college park md 20742 email ggalinato arec umd edu tel 301 405 0477 fax 301 314 9091

using repeat challengers to estimate the effect of campaign spending on election outcomes in the u s house previous studies of congressional spending have typically found a large positive effect of challenger spending but little evidence for effects of incumbent spending those studies however do not adequately control for inherent differences in vote getting ability across candidates high quality challengers are likely to receive a high fraction of the vote and have high campaign expenditures even if campaign spending has no impact on election outcomes to avoid that bias this paper examines elections in which the same two candidates face one another on more than one occasion differencing eliminates the influence of any fixed candidate or district attributes estimates of the effects of challenger spending are an order of magnitude below those of previous studies campaign spending has an extremely small impact on election outcomes regardless of who does the spending campaign spending limits appear socially desirable but public financing of campaigns does not

market reaction to business week inside wall street column a self fulfilling prophecy abstract this study focuses on stocks mentioned in a business week bw column in which over half the stories quote an analyst as a source the results of the study show that stocks with a favorable report in bw earn positive abnormal returns at the time of the distribution of the weekly however this is true only for stocks followed by less than twenty analysts within this group the market response increases as the number of analysts decreases stocks followed by more than twenty analysts do not respond at the time of their mention in bw we further document that trading volume increases at the time of the publication of the story the six month size adjusted post bw performance of the less closely followed stocks with favorable stories is negative and offsets the abnormal return at the time of the bw story we conclude that the evidence is consistent with the self fulfilling prophecy hypothesis i e traders react to bw stories and influence the prices of stocks only to lose in the long run six months the results also show that information obtained from non analyst sources has a greater impact on stock prices than the information from analyst sources indicating that some of analysts information is already reflected in prices through their clients trading the return reversion over six months is observed for bw stories with both analyst as well as non analyst sources

a referendum on trade theory voting on free trade in costa rica research on mass opinion in international political economy overwhelmingly relies on survey data this poses problems of external validity especially for a frequently low salience issue such as trade policy to examine whether survey findings about attitudes toward economic openness apply outside of surveys this note considers patterns of voting in the 2007 costa rican plebiscite about joining the central american free trade area several extant theories appear to explain voting patterns but the results are less in line with traditional economic models based on locally important economic sectors

is trade policy for sale congressional voting on recent trade bills this paper examines voting by u s representatives onthe north american free trade agreement the uruguayround agreement and most favored nation status forchina using recent political economy models of tradepolicy to formulate an empirical specification ofcongressional voting behavior we find evidence thatcampaign contributions influenced legislators voteson the nafta and uruguay round bills labor groupcontributions were associated with votes against freertrade while business contributions were associatedwith votes in favor of freer trade economicconditions in each member s district as well as thebroad policy views of the legislators also affectedrepresentatives voting decisions

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

do local exports impact congressional voting on free trade agreements abstract the united states is currently a party to 14 free trade agreements which cover 20 countries this paper explores a new aspect of economic interest models of legislative support for trade openness using updated data on more recent trade agreements i show that house and senate members are more likely to vote in favor of trade agreements when their states have higher exports to the country that is the subject of the agreement

the returns from rent seeking campaign contributions firm subsidies and the byrd amendment this is the first empirical study to examine congressional support of a new law that distributes antidumping duties to protected firms because the law produces a transparent measure of how much each firm was rewarded for its efforts to secure the bill s passage it provides researchers with a unique opportunity to study the link between the expected financial returns to firms campaign contributions and congressional behaviour our results indicate that campaign contributions from beneficiaries increased the likelihood that lawmakers would sponsor the law while contributions from the law s beneficiaries increased with the rewards they expected to receive ceci est la premiere etude empirique examinant le support par le congres americain d une nouvelle loi qui distribue les droits anti dumping collectes aux entreprises protegees parce que la loi produit une mesure transparente de la recompense versee a une entreprise pour ses efforts de lobbying afin de s assurer que la loi est mise en vigueur cela permet aux chercheurs d etudier le lien entre les rendements financiers anticipes pour les entreprises leurs contributions aux campagnes electorales et les actions du congres les resultats indiquent que les contributions aux campagnes electorales en provenance des beneficiaires potentiels accroissent la probabilite que les legislateurs vont supporter la loi et que les contributions en provenance des beneficiaires de la loi s accroissent a proportion que la taille de la recompense anticipee s accroit

is there a free rider problem in lobbying endogenous tariffs trigger strategies and the number of firms there are two reasons we expect moreconcentrated industries to have advantages over less concentrated industries in playing the lobbying game one is that in a noncooperative setting as the number firms rises we expect the free rider problem to become worse this is the finding of rodrik 1986 the second is that we expect that the ability to maintain a cooperative outcome deteriorates as the number of firms in the industry rises the classic reference is mancur olson 1965 also see russell hardin 1982 and todd sandler 1992 among others in contrast with the second intuition this paper shows that there is no general presumption that maintaining cooperation becomes more difficult as the number of firms in the industry rises the ability of an industry to overcome the free rider problem is analyzed in a re peated tariff lobbying game where cooperation may be maintained through the use of a simple trigger strategy 2 the difficulty of maintaining cooperation is measured by the critical value of the discount parameter all values above this critical value are consistent with cooperation and all values below the critical value imply that cheating will prevent maintenance of the cooperative outcome there is no presumption that this critical value rises with the number of firms a separate but related question involves asymptotic results standard intuition suggests that as industry structure approaches perfect competition it becomes impossible to maintain cooperation in the context of this paper this intuition corresponds to the critical value of the discount factor converging to i as the number of firms increases to infinity in the general case it is shown that the critical value of the discount parameter converges to a value less than 1 in the limit as the number of firms becomes arbitrarily large if the actual discount parameter lies above this value then cooperation may be maintained even with an infinite number of firms though the framework here is quite simple it provides results which contrast sharply to our standard intuition about how industry structure affects the ability to maintain cooperation there are two ways to interpret the results of this paper one is to assert that standard intuition is wrong and that there is in fact no presumption that maintaining cooperation becomes more difficult as the number

are contributors rational untangling strategies of political action committees empirical public choice literature and casual observation suggest that the behavior of political action committees is remarkably unsophisticated meaning that pacs give to those legislators who would support their interests anyway thus it is suggested that contributor behavior deviates from rational behavior which is a cornerstone of economic analysis in this paper a switching regression model is estimated that allows for strategies of pacs to vary for different contribution recipients i analyze the behavior of farm pacs over three election cycles in contrast to previous findings i find that contributor behavior is not inconsistent with rational behavior contributors who attempt to influence the voting behavior of members of congress give the most money to legislators whose constituency interest suggests that they are likely to be undecided on how to vote and pacs give less money to legislators who represent districts with larger farm populations because those legislators are likely to vote in con

why are some people and countries more protectionist than others we analyze two cross country data sets that contain information on attitudes toward trade as well as a broad range of socio demographic and other indicators we nd that pro trade preferences are signi cantly and robustly correlated with an individual s level of human capital in the manner predicted by the factor endowments model preferences over trade are also correlated with the trade exposure of the sector in which an individual is employed individuals in non traded sectors tend to be the most pro trade while individuals in sectors with a revealed comparative disadvantage are the most protectionist third an individual s relative economic status has a very strong positive association withpro trade attitudes finally non economic determinants in the form of values identities and attachments play an important role in explaining the variation in preferences over trade high degrees of neighborhood attachment and nationalism patriotism are associated withprotectionist tendencies c

does electoral competition affect politicians trade policy preferences evidence from japan this study examines the effect of electoral competition on politicians trade policy preferences using candidate observations from the house of representatives in japan s 2012 general election the study clarifies the effects of constituency size and the electoral strength of constituencies on candidates political stances the empirical results provide evidence that politicians preferences for trade policy are sensitive to electoral pressure but their reactions differ depending on the characteristics of each constituency the results reveal that for a broad constituency with a large concentration of agricultural workers election candidates are more likely to support protectionism than their counterparts running in a narrow constituency for city district election candidates electoral strength measured by the vote margin significantly affects their trade policy preferences candidates in close elections are more likely to be protectionist than candidates elected by a substantial majority suggesting that electoral pressures deter politicians from supporting trade liberalization

the economics of tropical deforestation this paper provides a survey of first wave economic studies of tropical deforestation and land use these studies of tropical forest land conversion are generally at the cross country level we also conduct a synthesis cross country analysis of tropical agricultural land expansion the results show that agricultural development is the main factor determining land expansion but institutional factors have an important influence income effects tend to vary from region to region and do not always display an environmental kuznets curve relationship copyright 2001 by blackwell publishers ltd

convertible call policies an empirical analysis of an information signaling hypothesis abstract this paper tests an information signaling hypothesis as a potential explanation for corporate convertible bond call policies and for the negative share price reaction to the announcement of the calls we test this hypothesis by trying to ascertain whether the information signaled is realized our results show an unexpected decline in the firm s performance subsequent to the call we also find significant negative cumulative returns during a sixty month period following the calls

explaining international and intertemporal variations in income inequality this paper explores the propositions that income inequality is relatively stable within countries and that it varies significantly among countries a new and expanded data set provides broad support for both propositions drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality the empirical analysis shows that the predicted variables associated with the first argument a measure of civil liberties and the initial level of secondary schooling and the second argument a measure of financial depth and the initial distribution of land are indeed important determinants of inequality this paper explores two propositions regarding income inequality they are first income inequality is relatively stable within countries and second it varies significantly across countries to illustrate note that the gini coefficient in india remained almost constant for forty years 1951 92 with mean 32 6 and standard deviation 2 0 2 in contrast the variation in gini coefficients across countries is large 61 9 in honduras in 1968 compared with 17 8 in bulgaria in 1976 if substantiated these propositions have potentially significant implications for poverty the significance of the first is obvious barring any fundamental socio political change poverty reduction will depend crucially on the rate of economic growth given this the significance of the second is that in inegalitarian economies the poor will enjoy a smaller share of any national increment in income than in more egalitarian ones drawing on a new and expanded data set on inequality deininger and squire 1996a the first of the paper s three sections conducts standard statistical tests of the two propositions the sample comprises 573 observations on the most common measure of inequality the gini coefficient for 49 developed and developing countries covering the period 1947 94 the results broadly confirm our two propositions specifically analysis of variance anova shows that about 90 of the total variance in the gini coefficients

tariffs subsidies and welfare with endogenous policy abstract it is a well established proposition of trade theory that in the absence of directly trade related distortions or policy goals subsidies are superior to tariffs for achieving any economic or non economic objective this paper shows that once the endogeneity of the distortion or non economic objective is allowed for the welfare ranking of various policies can be reversed the particular model analyzed is one where the level of non economic objectives that have to be fulfilled itself depends on the policy tools considered to fulfill them with this arises from the public good nature of tariffs compared to subsidies

political and economic factors affecting agricultural pac contribution strategies public choice describes a marketplace for political favors that could explain strong support for agriculture while many researchers have studied political markets few have examined agriculture this study addresses contributions from twenty six pac aggregates to senators in the 103rd congress using a tobit model legislative attributes such as tenure committee membership and ideology were regressed on contributions overall the agricultural industry targeted nonsenior conservative democrats from agriculturally dependent states in close election races and who served either on the agriculture committee or the agriculture appropriations committee however many differences were found across subsectors within agriculture such as crops and livestock

managing tropical forests reflections on the rent distribution discussion commercial forest extraction is one component of the tropical deforestation issue discussions about commercial extraction focus on choices among alternate rents and royalties these discussions often confuse measures of short and long run efficiency and equate distributive issues with efficiency they also overlook 1 potential lump sum charges 2 administrative costs and 3 previous public forestry agency experience this paper develops a simple analytical construct for clarifying these issues and examines each in turn

endogenous trade policy and lobby formation an application to the free rider problem abstract this paper develops a model in which tariffs are determined through bargaining between a utility maximizing policy maker and an industry lobby individual firms only contribute to the lobbying effort if it is in their own self interest so that both trade policies and lobby formation are endogenous by introducing bargaining between the industry and the government the paper provides microfoundations for the tariff formation function approach taken by many authors in the political economy literature applied to the free rider problem the model identifies general conditions under which increasing the number of firms in an industry makes cooperation between them more difficult