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A Dynamic Model of Endogenous Trade Policy

Author

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  • Lapham, Beverly J.
  • Ware, Roger

Abstract

Empirical evidence suggests that past levels of protection are significant determinants of current levels of protection. We investigate dynamic interactions among interest groups and resulting endogenous links between current and future trade policies. We explore these intertemporal links in a small open economy in which lobbying and tariff policies are the outcome of a dynamic game among factor owners. The model can generate cycles with prolonged periods of free trade and/or prolonged periods of restricted trade (i.e., persistent trade policies). An interesting aspect of the environment is the role of lobbying as a partial substitute for intertemporal trade.
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Suggested Citation

  • Lapham, Beverly J. & Ware, Roger, 1993. "A Dynamic Model of Endogenous Trade Policy," Queen's Economics Department Working Papers 273293, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:273293
    DOI: 10.22004/ag.econ.273293
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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