Reciprocated Unilateralism in Trade Reforms with Majority Voting
This paper shows how unilateral liberalization in one country can increase the voting support for reciprocal reduction in trade barriers in a partner country. When trade policies are determined simultaneously in the two countries, we show the possibility of multiple political equilibria - countries may both be protectionist or trade freely with each other. Starting with trade protection in both countries, a unilateral reform in one country is thus shown to bring about a free trade equilibrium (a self-enforcing state) that is consistent with majority voting in both countries.
|Date of creation:||Oct 2004|
|Publication status:||published as Krishna, Pravin, and Devashish Mitra. "Reciprocated Unilateralism in Trade Reforms with Majority Voting." Journal of Development Economics 85(1-2): 81-93, February 2008|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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