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Choked By Red Tape? The Political Economy Of Wasteful Trade Barriers

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  • Giovanni Maggi
  • Monika Mrázová
  • J. Peter Neary

Abstract

The implications of red‐tape barriers (RTBs) under lobbying pressures differ markedly from those of traditional trade barriers. RTBs affect the extensive margin of trade and may respond in opposite ways to reductions in tariffs versus reductions in natural trade costs: The former induce a protectionist backlash that may reduce trade both at the intensive and extensive margin, whereas the latter may induce a reduction in RTBs magnifying the direct trade‐increasing effects. Furthermore, if tariff commitments are optimized, the availability of RTBs limits the extent of tariff liberalization, and political uncertainty tends to increase the prevalence of RTBs.

Suggested Citation

  • Giovanni Maggi & Monika Mrázová & J. Peter Neary, 2022. "Choked By Red Tape? The Political Economy Of Wasteful Trade Barriers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 161-188, February.
  • Handle: RePEc:wly:iecrev:v:63:y:2022:i:1:p:161-188
    DOI: 10.1111/iere.12533
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    Cited by:

    1. Lionel Fontagné & Gianluca Orefice & Roberta Piermartini, 2020. "Making small firms happy? The heterogeneous effect of trade facilitation measures," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 565-598, August.
    2. Krenz, Astrid & Prettner, Klaus & Strulik, Holger, 2021. "Robots, reshoring, and the lot of low-skilled workers," European Economic Review, Elsevier, vol. 136(C).
    3. Kamei, Keita & Inomata, Kentaro, 2022. "Wasteful Trade Barriers in Oligopoly," MPRA Paper 114541, University Library of Munich, Germany.
    4. Neary, Peter & Carrère, Céline & Mrázová, Monika, 2020. "Gravity without Apologies: The Science of Elasticities, Distance, and Trade," CEPR Discussion Papers 14473, C.E.P.R. Discussion Papers.
    5. Céline Carrère & Monika Mrázová & J Peter Neary, 2020. "Gravity Without Apology: the Science of Elasticities, Distance and Trade," The Economic Journal, Royal Economic Society, vol. 130(628), pages 880-910.
    6. Ornelas, Emanuel & Tovar, Patricia, 2022. "Intra-bloc tariffs and preferential margins in trade agreements," Journal of International Economics, Elsevier, vol. 138(C).
    7. Chien-Jung Ting & Yi-Long Hsiao, 2020. "Exploring Solutions for the Trade Barriers in Taiwan," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(5), pages 1-2.
    8. Lorz, Oliver, 2020. "Investment in trade facilitating infrastructure: A political-economy analysis," European Journal of Political Economy, Elsevier, vol. 65(C).
    9. Dale-Olsen, Harald, 2023. "The Impact of New Free Trade Agreements on Incumbent Firms and Workers," IZA Discussion Papers 16649, Institute of Labor Economics (IZA).

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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