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Trade Policy with Intermediate Uses of Goods

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  • Carl-Johan Belfrage

    () (Lund University)

Abstract

We show that input-output linkages are important when trade policies and political contributions are determined by special interest politics as in the standard model of “protection for sale”. The ability of industry-specific special interests to bid for lower input prices implies that net rather than gross output is what matters to the level of protection enjoyed by an industry and ex-plains the empirical regularity of tariff escalation. Furthermore, stronger input-output linkages imply greater incentives to organize and stronger competition for policy favors and therefore larger aggregate political contributions in return for a given policy.

Suggested Citation

  • Carl-Johan Belfrage, 2003. "Trade Policy with Intermediate Uses of Goods," Rivista di Politica Economica, SIPI Spa, vol. 93(1), pages 217-252, January-F.
  • Handle: RePEc:rpo:ripoec:v:93:y:2003:i:1:p:217-252
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    More about this item

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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