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Reciprocated unilateralism in trade policy

In: The Political Economy of Trade Policy Theory, Evidence and Applications

Author

Listed:
  • Pravin Krishna
  • Devashish Mitra

Abstract

Using the menu-auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous, this paper analyzes the impact of unilateral trade liberalization by one country on its partner's trade policies. We find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country. Intuitively, unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import-competing lobby there for lower protection.

Suggested Citation

  • Pravin Krishna & Devashish Mitra, 2016. "Reciprocated unilateralism in trade policy," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 3, pages 37-63, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814569156_0003
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    JEL classification:

    • F0 - International Economics - - General
    • F6 - International Economics - - Economic Impacts of Globalization

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