DP14597 Lobbying for Globalization
We study the role of firms in the political economy of free trade agreements (FTAs). Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we show that lobbying on FTAs is dominated by large firms engaged in international trade, which are in favor of these agreements. We develop a model of endogenous lobbying on FTAs by heterogeneous firms, which can explain why only pro-FTA "superstar" firms select into lobbying. The model also delivers predictions on the intensive margin of lobbying. In line with these predictions,
we find that larger firms spend more supporting a trade agreement, and individual firms spend more supporting agreements that generate larger gains -- i.e. larger improvements in their access to foreign consumers and suppliers and smaller increases in domestic competition -- and that
are more likely to be opposed by politicians.