Electoral Competiton and Optimal Tariffs
I show that the unique Nash equilibrium of a model of political competition between two parties in a Heckscher-Ohlin setting entails differentiated trade policies, with a party proposing a high tariff, and the other one a low one. The basic departure from a median voter model is the introduction of campaign contributions, which influence the vote of a group of uninformed voters. Parties are Downsian, not ideological, yet campaign contributions create an asymmetry between them. Thus, the heterogeneous behavior of parties, protectionism and pro-trade, is endogenously decided, rather than a prior assumed in previous works.
|Date of creation:||05 Sep 2005|
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- Gene M. Grossman & Elhanan Helpman, 1992.
"Protection For Sale,"
NBER Working Papers
4149, National Bureau of Economic Research, Inc.
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"Black Hole Tariffs and Endogenous Policy Theory,"
Cambridge University Press, number 9780521377003, june. pag.
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- Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 265-286.
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