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A Political-Economic Account of Global Tariffs

Author

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  • Kishore Gawande
  • Pravin Krishna
  • Marcelo Olarreaga

Abstract

type="main" xml:id="ecpo12056-abs-0001"> The objective of this paper is to evaluate the relative importance of three distinct factors that motivate redistributive government policy: tariff revenues, consumer welfare, and producer profits. We generalize Grossman and Helpman's (1994, American Economic Review 84: 833–850). protection-for-sale model by positing that government places different weights on these components of the welfare of its polity when it decides which industries to protect and to what extent. Employing tariff data from 40 countries, the predictions from this model are used to estimate these weights. The results are surprising in their range and variety. Developing countries with weak tax systems often weigh tariff revenue heavily, while more developed countries weigh producer interests the most. Very few hold consumer welfare dear.

Suggested Citation

  • Kishore Gawande & Pravin Krishna & Marcelo Olarreaga, 2015. "A Political-Economic Account of Global Tariffs," Economics and Politics, Wiley Blackwell, vol. 27(2), pages 204-233, July.
  • Handle: RePEc:bla:ecopol:v:27:y:2015:i:2:p:204-233
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    File URL: http://hdl.handle.net/10.1111/ecpo.2015.27.issue-2
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    Cited by:

    1. Kuenzel, David J., 2017. "WTO dispute determinants," European Economic Review, Elsevier, vol. 91(C), pages 157-179.
    2. Matthew T. Cole & James Lake & Ben Zissimos, 2017. "Contesting an International Trade Agreement," Working Papers 1703, California Polytechnic State University, Department of Economics.
    3. Lake, James & Roy, Santanu, 2017. "Are global trade negotiations behind a fragmented world of “gated globalization”?," Journal of International Economics, Elsevier, vol. 108(C), pages 117-136.
    4. Crivelli, Pramila, 2016. "Regionalism and falling external protection in high and low tariff members," Journal of International Economics, Elsevier, vol. 102(C), pages 70-84.
    5. Sajal Lahiri & Peri Silva, 2016. "Potential Pareto-Improving Move Toward Most Favored Nation Tariffs," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1086-1104, April.
    6. Sokolovska, Olena & Sokolovskyi, Dmytro, 2016. "Optimization of government trade behavior and its implication for small developing economy (the case of Ukraine)," MPRA Paper 71983, University Library of Munich, Germany.

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