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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2007, Vol. 2 Issue (2) : 250-274
Political competition and bilateral direct investments
YU Miaojie
China Center for Economic Research (CCER), Peking University, Beijing 100872, China;
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Abstract This paper investigates a basic question about the international political economy why is international trade not free? To answer this question, we modified Grossman and Helpman (1994) by considering that interest lobbies make political contributions to both the incumbent government and the political challenger in order to influence the incumbent government s choice of trade policy. By examining the contribution schedules under a framework of bilateral direct investments, we find that the modified Ramsey rule still holds under our setting.
Issue Date: 05 June 2007
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YU Miaojie. Political competition and bilateral direct investments[J]. Front. Econ. China, 2007, 2(2): 250-274.
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