Lobbying for Globalisation

Abstract Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we construct a unique dataset that allows us to identify which firms lobby on free trade agreements negotiated by the United States, their positions (in favour or against) and their lobbying efforts on the ratification of each trade agreement. Using this dataset, we show that lobbying on free trade agreements is dominated by large multinational firms, which are in favour of these agreements. On the intensive margin, we exploit exogenous variation across free trade agreements to show that individual firms put more effort into supporting agreements that generate larger potential gains—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. To rationalise these findings, we develop a new model of endogenous lobbying on trade agreements. In this model, heterogeneous firms select into trade and choose whether and how much to spend lobbying on the ratification of a free trade agreement, and politicians may be biased in favour of or against the agreement.