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This paper empirically explores the connection between two recent phenomena in the European scenario: the dramatic upsurge of non-tariff trade measures and the remarkable rise in the role of European business lobbies. While these two facts have been widely recognized by the international trade and the political economy literature, empirical investigation into the connection between the two has so far been impeded by the lack of data. To identify European special interest groups and their influence on policy decisions, we construct an original dataset by collecting information on the participation of national and international organizations in the European Commission consultations on trade issues and by merging it with newly released information on non-tariff measures aggregated at the tariff-line level. Drawing upon the panel structure of the dataset, we find that European lobbies exert an important influence on the policy-makers, even after controlling for product fixed effects and a number of product and industrial variables. Between two possible interpretations of this finding, either that participation in meetings captures political pressure (possibly including the supply of biased information) on policy-decisions or that it involves, rather, transmission of true information, our empirical results tend to favor the former. Nonetheless, we are inclined to rule out the possibility that registration in consultations is in itself just signaling for active involvement in lobbying action, since we find evidence that actual meeting attendance has a larger impact on policy decision than registration only.

Cultural and institutional differences among nations may result in differences in the ratios of marginal costs of goods in autarchy and thus be the basis of specialization and comparative advantage, as long as these differences are not eliminated by trade. We provide an evolutionary model of endogenous preferences and institutions under autarchy, trade and factor mobility in which multiple asymptotically stable cultural-institutional conventions may exist, among which transitions may occur as a result of decentralized and un-coordinated actions of employers or employees. We show that: i) specialization and trade may arise and enhance welfare even when the countries are identical other than their cultural-institutional equilibria; ii) trade liberalization does not lead to convergence, it reinforces the cultural-institutional differences upon which comparative advantage is based and may thus impede even Pareto-improving cultural-institutional transitions; and iii) by contrast, greater mobility of factors of production favors decentralized transitions to a superior cultural-institutional convention by reducing the minimum number of cultural or institutional innovators necessary to induce a transition.

Most pre-crisis explanations of the various corporate governance systems have considered the separation between ownership and control to be an advantage of the Anglo-American economies. They have also attributed the failure of other countries to achieve these efficient arrangements to their different legal and/or electoral systems. In this paper we compare this view with the co-evolution approach based on the hypothesis that politics and corporate governance influence each other, generating complex interactions of financial and labour market institutions. Countries cluster along different complementary politics-business interaction paths and there is no reason to expect, or to device policies for, their convergence to a single model of corporate governance. We argue that this hypothesis provides a more convincing explanation of the past histories of major capitalist economies and can suggest some useful possible scenarios of their future institutional development. Bayesian model comparison suggests that the co-evolution approach turns out at least as influential as the competing theories in explaining shareholder and worker protection determination.

This paper empirically explores the connection between two recent phenomena in the European scenario: the dramatic upsurge of non-tariff trade measures and the remarkable rise in the role of European business lobbies. While these two facts have been widely recognized by the international trade and the political economy literature, empirical investigation into the connection between the two has so far been impeded by the lack of data. To identify European special interest groups and their influence on policy decisions, we construct an original dataset by collecting information on the participation of national and international organizations in the European Commission consultations on trade issues and by merging it with newly released information on non-tariff measures aggregated at the tariff-line level. Drawing upon the panel structure of the dataset, we find that European lobbies exert an important influence on the policy-makers, even after controlling for product fixed effects and a number of product and industrial variables. Between two possible interpretations of this finding, either that participation in meetings captures political pressure (possibly including the supply of biased information) on policy-decisions or that it involves, rather, transmission of true information, our empirical results tend to favor the former. Nonetheless, we are inclined to rule out the possibility that registration in consultations is in itself just signaling for active involvement in lobbying action, since we find evidence that actual meeting attendance has a larger impact on policy decision than registration only.

Traditional trade theory maintains that international economic integration always yields potential welfare benefits. This result can however be maintained only in a world bereft of its institutional and cultural dimensions. In this paper we show that, once institutional factors are introduced, integration may be detrimental to welfare. Exploiting a game theoretical approach, we consider the integration between two societies that only differ in their institutional structures. Two important results are derived. First, intercommunity integration may trigger the demise of the erstwhile internal arrangements. Second, the collapse of the domestic institutional equilibrium can lead to a loss of welfare for the community as a whole.

Traditional trade theory obtains that international integration always yields large potential welfare benefits, even in a static constant returns competitive economy. Such a result however can only be maintained in a world bereft of its institutional and cultural dimensions. In this paper we show that once institutional factors are introduced into the discussion, integration may be detrimental to welfare in the long-run. Exploiting a game theoretical approach, we consider the integration between two societies that only differ in their institutional structures. Two important results are derived. First we illustrate that intercommunity integration may entail the disruption of the pre-existent internal arrangements in at least one of the two societies. This is crucial especially because in our model institutional diversity is the only reason that makes intercommunity integration profitable. Second, in the presence of gains from internal cooperation, the collapse of the domestic institutional equilibrium leads to a loss of welfare for the community as a whole.

Our theory of cultural-institutional persistence and innovation is based on uncoordinated updating of individual social norms and contracts, so that both culture and institutions co-evolve. We explain why Pareto-dominated cultural-institutional configurations may persist over long periods and how transitions nonetheless occur. In our model the exercise of elite power plays no role in either persistence or innovation, and transitions occur endogenously. This is unlike models in which elites impose inferior institutions or cultures as a self-interested distributional strategy. We show that persistence will be greater the more inferior is the Pareto-dominated configuration and the more rational and individualistic is the population.