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Protection Versus Promotion: An Empirical Investigation

In: The Political Economy of Trade Policy Theory, Evidence and Applications

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  • DEVASHISH MITRA
  • DIMITRIOS D. THOMAKOS
  • MEHMET A. ULUBAŞOĜLU

Abstract

Using Turkish industry-level data from 1983 to 1990, we find that politically organized industries receive both higher protection and promotion than unorganized ones. Tariff rates are decreasing (increasing) in the import-penetration ratio and the absolute value of the import-demand elasticity for organized (unorganized) industries. Subsidy rates are decreasing (increasing) in the output-supply elasticity for organized (unorganized) industries. The results are consistent with the predictions of the Grossman–Helpman model and its extension in this paper. The mix of protection and promotion is inversely related to the ratio of their respective marginal deadweight cost measures.

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  • Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoĝlu, 2016. "Protection Versus Promotion: An Empirical Investigation," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 12, pages 221-236, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814569156_0012
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    1. Devashish Mitra, 2016. "On The Endogenous Choice Between Protection And Promotion," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 11, pages 201-219, World Scientific Publishing Co. Pte. Ltd..
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    9. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoğlu, 2016. "“Protection For Sale” In A Developing Country: Democracy Vs. Dictatorship," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 9, pages 163-174, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Francois, Joseph & Nelson, Douglas R., 2014. "Political support for trade policy in the European Union," European Journal of Political Economy, Elsevier, vol. 36(C), pages 243-253.
    2. Francois, Joseph & Nelson, Douglas & Pelkmans-Balaoing, Annette, 2008. "Endogenous Protection in General Equilibrium: Estimating Political Weights in the EU," CEPR Discussion Papers 6979, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Political Economy; Protection; Trade Policy; Tariffs; Subsidies; Reciprocal Trade Liberalization; Unilateral Trade Liberalization; Unilateralism; Reciprocity; Lobbying; Median Voter Models;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F6 - International Economics - - Economic Impacts of Globalization

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