This paper argues that labor market distortions in transition and developing economies help explain differential impacts of trade liberalization. We assume that workers differ in ability. In a market economy their earnings depend on their ability. However, earnings are independent of ability due...

This paper proposes a new test of the Protection for Sale (PFS) model by Grossman and Helpman (1994). Unlike existing methods in the literature, our approach does not require any data on political organizations. We formally show that the PFS model predicts that the quantile regression of the...

In contrast to existing work which takes an ex-ante approach and looks for policy prescriptions which yield welfare improvements, we take an ex-post approach. We ask whether there are indicators which show whether welfare has risen or not in the wake of a reform. That is, we look for evidence of...

The outcome of trade policies to increase access for foreign firms to the home country's market is shown to be sensitive to the implementation procedure used. The importance of the timing of moves between government and firms is highlighted by focusing on taxes and subsidies to implement minimum...

In oligopolistic situations content protection can have unexpected effects as it changes the nature of interactions between input suppliers. With a duoply, it does so in a manner that makes the foreign firm wish to match price increases and decreases of the domestic firm. Domestic input...

This paper critically and selectively surveys the literature on protection for sale and discusses directions for future research in this area. It suggests that the standard approach needs to be augmented to provide more compelling tests of this model

This paper asks whether the results obtained from using the standard approach to testing the influential Grossman and Helpman "protection for sale (PFS)" model of political economy might arise from a simpler setting. A model of imports and quotas with protection occurring in response to import...

In contrast to recent literature, we show that market access requirements (MARs) can be implemented in a procompetitive manner even in the absence of threats in related markets. By focusing on subsidies that are paid only when the requirement is met, we show that a MAR can increase aggregate...