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 favor 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number
4870.
Length: Date of creation: Sep 1994 Date of revision: Publication status: published as "The Political Economy of Trade Policy," 1996, in G. Grossman and K.Rogoff,eds., Handbook of International Economics, Vol. III, North-Holland, Amsterdam. Handle: RePEc:nbr:nberwo:4870
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Find related papers by JEL classification: F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Kyle Bagwell & Robert W. Staiger, 1996.
"Reciprocal Trade Liberalization,"
Discussion Papers
1150, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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