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Discretion, Lobbying, and Political Influence in Models of Trade Policy

  • Michael Hoffman

Most models of trade policy determination and rent-seeking abstract from the problem of commitment: both the politician's commitment to implement a policy and the lobbyist's commitment to contribute to the politician. This article shows that the commitment problem is a static prisoner's dilemma, in which neither lobbying nor inefficient policies occur. The only way to rationalize the existence of lobbying and protection within a finite time horizon is in a repeated game with uncertain duration. I construct a model in which the uncertainty comes from periodic elections. The model has implications for redistribution and political influence across political systems and institutions.

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Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 8 (2005)
Issue (Month): 3 ()
Pages: 175-188

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Handle: RePEc:taf:jpolrf:v:8:y:2005:i:3:p:175-188
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  1. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December.
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  3. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
  4. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  5. Ronald Wintrobe, 2001. "How to understand, and deal with dictatorship: an economist's view," Economics of Governance, Springer, vol. 3(1), pages 35-58, 03.
  6. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
  7. Rose, Andrew K, 2002. "Do WTO Members have More Liberal Trade Policy?," CEPR Discussion Papers 3659, C.E.P.R. Discussion Papers.
  8. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
  9. Schnytzer, Adi & Sustersic, Janez, 1998. " Why Join the Party in a One-Party System?: Popularity versus Political Exchange," Public Choice, Springer, vol. 94(1-2), pages 117-34, January.
  10. Fredriksson, Per G. & Svensson, Jakob, 2003. "Political instability, corruption and policy formation: the case of environmental policy," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1383-1405, August.
  11. Alberto Alesina & Guido Tabellini, 1988. "Voting on the Budget Deficit," NBER Working Papers 2759, National Bureau of Economic Research, Inc.
  12. repec:cup:cbooks:9780521377003 is not listed on IDEAS
  13. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoglu, 2002. ""Protection For Sale" In A Developing Country: Democracy Vs. Dictatorship," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 497-508, August.
  14. Lopez, Edward J, 2003. " Term Limits: Causes and Consequences," Public Choice, Springer, vol. 114(1-2), pages 1-56, January.
  15. Martín Rama, 1994. "Endogenous Trade Policy: A Time-Series Approach," Economics and Politics, Wiley Blackwell, vol. 6(3), pages 215-232, November.
  16. Timothy Besley & Anne Case, 1993. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," NBER Working Papers 4575, National Bureau of Economic Research, Inc.
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  18. Kaempfer, William H. & Tower, Edward & Willett, Thomas D., 2002. "Trade Protectionism," Working Papers 02-20, Duke University, Department of Economics.
  19. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, EconWPA.
  20. Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
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