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Combining rent-seeking and public choice theory in the analysis of tariffs versus quotas

  • William Kaempfer
  • Thomas Willett

Economists' continuing criticisms of protectionism make a valuable contribution to the general interest element of the forces which operate to keep propensities to protect somewhat in check. McKenzie rightly warns, however, that proposals by economists for giving protection in more efficient forms run the danger of increasing the total supply of protection. Thus, we agree that serious consideration should be given to the political economy responses which may be induced before one advocates ways of doing more efficiently what one believes should not be done in the first place. It does not follow, however, that all such policies will have net negative unanticipated consequences. In the case of tariffs versus quotas, we do not believe that we have yet sufficient knowledge of all of the relevant political economy considerations to predict about the full effects of legislation which allowed trade protection to only take the form of tariffs. We are doubtful, however, that such a measure would increase the total quantity of protection through the channels outlined by McKenzie. We believe that the same type of basic public choice analysis of the individual incentives to lobby which suggests that consumer-taxpayers will not force the political process to operate so as to maximize aggregate economic efficiency with respect to the level of protection also suggests that the net lobbying for quotas is likely to be higher on average than the net lobbying for tariffs. Political effectiveness and ability to overcome free riding on the part of tariff revenue seekers is likely to be low at the margin. Furthermore, issues of visibility and institutional structure are likely to lessen the ability of anti-protection forces to lobby against quotas. Placed within a broader framework, public choice and rent-seeking theory is consistent with the empirical evidence that where quotas are used, protection is high. Copyright Kluwer Academic Publishers 1989

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Article provided by Springer in its journal Public Choice.

Volume (Year): 63 (1989)
Issue (Month): 1 (October)
Pages: 79-86

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Handle: RePEc:kap:pubcho:v:63:y:1989:i:1:p:79-86
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  1. Arye Hillman, 1988. "Tariff-revenue transfers to protectionist interests: Compensation for reduced protection or supplementary reward for successful lobbying?," Public Choice, Springer, vol. 58(2), pages 169-172, August.
  2. Rachel McCulloch, 1973. "When Are a Tariff and a Quota Equivalent:," Canadian Journal of Economics, Canadian Economics Association, vol. 6(4), pages 503-11, November.
  3. James E. Anderson, 1988. "The Relative Inefficiency of Quotas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511789, June.
  4. Richard Harris, 1985. "Why Voluntary Export Restraints Are 'Voluntary.'," Canadian Journal of Economics, Canadian Economics Association, vol. 18(4), pages 799-809, November.
  5. Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, vol. 78(4), pages 719-45, September.
  6. Kaempfer, William H & Marks, Stephen V & Willett, Thomas D, 1988. "Why Do Large Countries Prefer Quantitative Trade Restrictions?," Kyklos, Wiley Blackwell, vol. 41(4), pages 625-46.
  7. William Riker, 1988. "The place of political science in public choice," Public Choice, Springer, vol. 57(3), pages 247-257, June.
  8. Godek, Paul E, 1985. "Industry Structure and Redistribution through Trade Restrictions," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 687-703, October.
  9. McCulloch, Rachel, 1987. "Why do governments prefer nontariff barriers? A comment on deardorff," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 26(1), pages 217-221, January.
  10. McArthur, John & Marks, Stephen V, 1988. "Constitutent Interest vs. Legislator Ideology: The Role of Political Opportunity Cost," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 461-70, July.
  11. William H. Kaempfer & J. Harold, Jr McClure & Thomas D. Willett, 1989. "Incremental Protection and Efficient Political Choice between Tariffs and Quotas," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 228-36, May.
  12. Kaemfer, William H & Lowenberg, Anton D, 1988. "The Theory of International Economic Sanctions: A Public Choice Approach," American Economic Review, American Economic Association, vol. 78(4), pages 786-93, September.
  13. Richard McKenzie, 1988. "The relative restrictiveness of tariffs and quotas: A reinterpretation from a rent-seeking perspective," Public Choice, Springer, vol. 58(1), pages 85-90, July.
  14. Cassing, James H. & Hillman, Arye L., 1985. "Political influence motives and the choice between tariffs and quotas," Journal of International Economics, Elsevier, vol. 19(3-4), pages 279-290, November.
  15. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  16. Baack, Bennett D. & Ray, Edward John, 1983. "The political economy of tariff policy: A case study of the United States," Explorations in Economic History, Elsevier, vol. 20(1), pages 73-93, January.
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