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Why Tariffs, Not Subsidies? A Search for Stylized Facts

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  • Ederington Josh

    (University of Kentucky)

  • Minier Jenny

    (University of Kentucky)

Abstract

Barriers to trade are commonly viewed as a result of political systems in which politically influential groups benefit from and successfully lobby for protection. However, trade policy is a highly inefficient tool for redistributing income. Although recent theoretical research has focused on explanations of why (inefficient) trade barriers might be preferred to more direct means of redistribution, this research has been carried out with little empirical support. We address this gap in the literature with an exploratory cross-country empirical investigation of the economic factors correlated with a reliance on tariffs over subsidies. We find that the existing theoretical literature is consistent with the cross-country evidence.

Suggested Citation

  • Ederington Josh & Minier Jenny, 2006. "Why Tariffs, Not Subsidies? A Search for Stylized Facts," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-34, November.
    • Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:1:n:31
    DOI: 10.1515/1538-0645.1579
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    Citations

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    Cited by:

    1. Fujimoto, Takashi & Watanabe, Masahide, 2022. "Comparison of the price adjustment program and subsidy scheme in Japan: Evaluation of domestic sugar support policy to internalize positive externalities," Japan and the World Economy, Elsevier, vol. 61(C).
    2. Nuno Limão & Patricia Tovar, 2018. "Policy choice: Theory and evidence from commitment via international trade agreements," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 6, pages 179-198, World Scientific Publishing Co. Pte. Ltd..
    3. Josh Ederington & Jenny Minier, 2008. "Reconsidering the empirical evidence on the Grossman‐Helpman model of endogenous protection," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 501-516, May.
    4. Johan F.M.Swinnen & Alessandro Olper & Thijs Vandemoortele, 2011. "The Political Economy of Policy Instrument Choice: Theory and Evidence from Agricultural Policies," LICOS Discussion Papers 27911, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    5. Tavernier, Edmund M. & Onyango, Benjamin M., 2006. "Agricultural Policy as a Social Engineering Tool," 2006 Annual meeting, July 23-26, Long Beach, CA 21359, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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