Privatization and the Political Economy of Strategic Trade Policy
AbstractThis article considers the interdependence between international financial markets, privatization, and strategic trade policies. We describe an economy where portfolio allocations are chosen by risk-averse agents who rationally forecast future trade policies. Assuming a government responsive to the policy preferences of voters, we show that ownership structure affects trade policy through the incentives for lobbying by private agents. Portfolios and trade policy are thus jointly determined in political-economic equilibrium. Privatization of state-owned industry exerts an important influence over the trade policies chosen by domestic and foreign governments by expanding the scope for individual diversification.
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 42 (2001)
Issue (Month): 2 (May)
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Other versions of this item:
- JoAnne Feeney & Arye Hillman, 1999. "Privatization and The Political Economy of Strategic Trade Policy," Discussion Papers 99-05, University at Albany, SUNY, Department of Economics.
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- Dewit, Gerda, 2001. "Intervention in risky export markets: insurance, strategic action or aid?," European Journal of Political Economy, Elsevier, vol. 17(3), pages 575-592, September.
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- Ronald W. Jones, 2000. "Private Interests and Government Policy in a Global World," Tinbergen Institute Discussion Papers 00-051/2, Tinbergen Institute.
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