Lobbying paradox of strategic export policy in a differentiated duopoly

This paper presents an analysis of lobbying based on imperfect competition by using three-stage game. It seeks to explain why lobbying efforts might be influenced by a home government's viewpoint. Endogenously determined lobbying may distort the outcomes of strategic export policy, so that the results would differ from that generated by exogenously set lobbying. The lobbying paradox results in the domestic firm being worse off than if it could credibly commit to not engage in lobbying. Moreover, in the presence of foreign firm lobbying, the desired tax level is as the same as that of the benchmark case without lobbying. © 2010 Springer-Verlag.