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The Value of Trade Agreements in the Presence of Political Pressures

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Listed:
  • Maggi, G
  • Rodriguez-Clare, A

Abstract

An argument often heard in favor of trade agreements is that they provide a way for a government to credibly distance itself from the domestic special interest groups who lobby for protection; the idea is that, by committing to free trade, a government may be able to foreclse political pressures at home. In this paper we develop a dynamic, small-country model in which factors are sector-specific in the short run but mobile across sectors in the long run, and show that the rents derived from the political process may not compensate the government for the welfare distortions caused by protection.

Suggested Citation

  • Maggi, G & Rodriguez-Clare, A, 1996. "The Value of Trade Agreements in the Presence of Political Pressures," Papers 180, Princeton, Woodrow Wilson School - Public and International Affairs.
  • Handle: RePEc:fth:priwpu:180
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    References listed on IDEAS

    as
    1. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    2. McLaren, John, 1997. "Size, Sunk Costs, and Judge Bowker's Objection to Free Trade," American Economic Review, American Economic Association, vol. 87(3), pages 400-420, June.
    3. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-837, December.
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    More about this item

    Keywords

    TRADE AGREEMENTS ; LOBBYING;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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