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What does the Political Economy Literature on Trade Policy (Not) Tell Us That We Ought to Know?

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Rodrik, Dani

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Abstract

Three questions lie at the core of the large and distinguished literature on the political economy of trade policy. First, why is international trade not free? Second, why are trade policies universally biased against (rather than in favour of) trade? Third, what are the determinants of the variation in protection levels across industries, countries, and institutional contexts? These questions are handled only imperfectly by the existing literature. Current models treat trade policy as a redistributive tool, but do not explain why it emerges in political equilibrium in preference over more direct policy instruments. Further, existing models do not generate a bias against trade, implying that pro-trade interventions are as likely as trade-restricting interventions. The greatest contribution of the political economy literature may lie in developing a better grasp of normative economic analysis - that is, in helping design policies, rules, and institutions.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1039.

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Date of creation: Oct 1994
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Handle: RePEc:cpr:ceprdp:1039

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Related research
Keywords: Political Economy; Trade Policy;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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  1. Kyle Bagwell & Robert W. Staiger, 1996. "Reciprocal Trade Liberalization," NBER Working Papers 5488, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Pravin Krishna & Devashish Mitra, 2003. "Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach," NBER Working Papers 9631, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Scott Bradford, 2000. "Rents, Votes, and Protection: Explaining the Structure of Trade Barriers Across Industries," Econometric Society World Congress 2000 Contributed Papers 1717, Econometric Society. [Downloadable!]
  4. Marcel Vaillant, 1998. "Endogenous number of lobby groups in a specific factor trade model," Documentos de Trabajo (working papers) 0198, Department of Economics - dECON. [Downloadable!]
  5. Echenique, Federico & Eguia, Jon X., 2005. "An explanation of inefficient redistribution: Transfers insure cohesive groups," Working Papers 1234, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  6. Joseph F. Francois & Will Martin, 1998. "Commercial Policy Uncertainty, the Expected Cost of Protection, and Market Access," Tinbergen Institute Discussion Papers 98-059/2, Tinbergen Institute. [Downloadable!]
  7. Epstein, Gil S. & Nitzan, Shmuel, 2002. "Political Culture and Monopoly Price Determination," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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