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Tariff Formation In A Multidimensional Voting Model

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  • Wolfgang Mayer
  • Raymond Riezman

Abstract

The theory of endogenous trade policy formation argues that tariffs emerge from the political process. This occurs because of conflicting economic interests trying to redistribute income in their favor through the adoption of suitable trade policies. Mayer and Riezman (1987) questioned this view arguing that if individuals differ only in factor ownership they would always prefer some tax/subsidy policy to tariffs. Here we allow individuals to differ not only with respect to factor ownership, but also with respect to consumption preferences and income tax treatment. We show that tariffs might be the social decision even though nobody's individual preferences suggest tariffs as the best choice.

Suggested Citation

  • Wolfgang Mayer & Raymond Riezman, 1989. "Tariff Formation In A Multidimensional Voting Model," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 61-79, March.
    • Handle: RePEc:bla:ecopol:v:1:y:1989:i:1:p:61-79
    DOI: 10.1111/j.1468-0343.1989.tb00005.x
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    References listed on IDEAS

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    1. Jagdish N. Bhagwati, 1982. "Introduction to "Import Competition and Response"," NBER Chapters, in: Import Competition and Response, pages 1-8, National Bureau of Economic Research, Inc.
    2. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    3. Jagdish N. Bhagwati, 1982. "Import Competition and Response," NBER Books, National Bureau of Economic Research, Inc, number bhag82-1.
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    Cited by:

    1. Glazer, Amihai & Ranjan, Priya, 2007. "Trade protection to reduce redistribution," European Journal of Political Economy, Elsevier, vol. 23(3), pages 790-805, September.
    2. Weck-Hannemann, Hannelore, 1989. "Protectionism in direct democracy," Discussion Papers, Series II 79, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. Foster, William & Gray, Richard & Rausser, Gordon C., 1991. "Resource mobility, diversification, and the compensation requirements of trade reform," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6m71g4vd, Department of Agricultural & Resource Economics, UC Berkeley.
    4. Das, Satya P., 2001. "Endogenous distribution and the political economy of trade policy," European Journal of Political Economy, Elsevier, vol. 17(3), pages 465-491, September.
    5. Pyne, Derek, 2006. "Microfoundations of Influencing Public Opinion: Lobbying and Voting for Trade Policies," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 551-576.
    6. Jagdish Bhagwati, 1989. "Is free trade passé after all?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 125(1), pages 17-44, March.

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