To ban or not to ban: Foreign lobbying and cross-national externalities

This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize cross-national externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation.