Market access for sale

This paper focuses on the links between foreign lobbying and preferential market access granted by the United States' government to exporters in the rest of the Americas. We first develop a simple framework based on Grossman and Helpman [Grossman, G., Helpman, E., 1994. Protection for sale. American Economic Review 84 (4) 833-850.] to explain how lobbying by foreign firms affects their preferential access to the United States market. We then estimate the model using data on tariff preferences and lobby contributions for the 34 countries in the region. Empirical results suggest that foreign lobbying is an important force behind preferential market access to the United States. The structural estimates indicate that the weight given to foreign lobby contributions in the United States' government objective function is five times higher than the weight granted to tariff revenue forgone due to preferences. Thus, our results indicate that market access is up for sale and foreign lobbies are buying it.