Baldwin, Richard E.; Robert-Nicoud, Frédéric - In: Journal of the European Economic Association 5 (2007) 5, pp. 1064-1093
Governments frequently intervene to support domestic industries, but a surprising amount of this support goes to ailing sectors. We explain this with a lobbying model that allows for entry and sunk costs. Specifically, policy is influenced by pressure groups that incur lobbying expenses to...