Systematic Political Grass-Root Support for Tariffs
AbstractThe leading political-economy-of-trade models are virtually silent on two fundamental questions raised by Rodrik in 1995. Why are trade policies systematically biased against trade? And why are tariffs rather than more efficient production subsidies adopted to redistribute income? This paper shows that systematic political grass-root support for trade-restricting and inefficient tariffs emerges when the government has a revenue goal and collecting taxes is costly. Even if no tax instrument enjoys an advantage with respect to collection costs and the factor ownership distribution is unbiased, more people support tariffs than import or production subsidies. More generally, the presence of tax-collection costs creates a grass-root support bias for taxes over subsidies as instruments to redistribute income. Copyright 2002 by Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 10 (2002)
Issue (Month): 4 (November)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
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- Djerdjian, Daron O., 2009. "Economies of scale and trade policy: The median voter model revisited," International Review of Economics & Finance, Elsevier, vol. 18(3), pages 479-487, June.
- Knobel, A., 2011. "Inter-industry Import Tariff Differences in Russia," Journal of the New Economic Association, New Economic Association, issue 11, pages 64-84.
- Limao, Nuno & Panagariya, Arvind, 2007. "Inequality and endogenous trade policy outcomes," Journal of International Economics, Elsevier, vol. 72(2), pages 292-309, July.
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