A Comparison of Optimal Tariffs and Welfare under No Lobbying, Domestic Lobbying and Domestic-foreign Lobbying

type="main" xml:id="twec12251-abs-0001"> <title type="main">Abstract</title> <p>Whether and what type of the lobbying-induced trade policies can improve the domestic welfare? We show that as compared to the case of no lobbying and the case of domestic lobbying, the domestic-foreign lobbying may achieve the lowest tariff and may also realise the highest welfare for the domestic country. Our finding provides a theoretical explanation to the prevalent lobbying competition between Asian firms and US firms in USA recently. We argue that the domestic-foreign lobbying may contribute to a freer trade in the domestic country, and lobbying competition may be one of the strongest forces pushing for trade liberalisation.