ABSTRACT
We have observed that when protection is endogenously determined via the political process, a cost of protection additional to the consumption inefficiency and resource-misallocation costs is potentially introduced, via the value of the real resources used in efforts to influence trade policy. Let us now abstract from the possibility, noted byBhagwati (1980) and discussed in the previous section, that in protection-distorted equilibria resources may have negative shadow prices. Rather, let us assume that the resources directed at seeking to influence trade policy could be more productively used in activities whichincrease national income, as opposed to attempts tochange income distribution via protection. If this is so, the use of resources in contests to influence policy outcomes has an associated real cost. This section is concerned with the measurement of this cost.
