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Electoral Competiton and Optimal Tariffs

Author

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  • Miaojie Yu

    (Department of Economics, University of California, Davis)

Abstract

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.

Suggested Citation

  • Miaojie Yu, 2005. "Electoral Competiton and Optimal Tariffs," International Trade 0509002, EconWPA.
  • Handle: RePEc:wpa:wuwpit:0509002 Note: Type of Document - pdf; pages: 24. Please contact the author for the detail mathematical proof if interested.
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    References listed on IDEAS

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    1. Robert C. Feenstra & Jagdish N. Bhagwati, 1982. "Tariff Seeking and the Efficient Tariff," NBER Chapters,in: Import Competition and Response, pages 245-262 National Bureau of Economic Research, Inc.
    2. Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, pages 246-250.
    3. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521377003, November.
    4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, pages 833-850.
    5. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, pages 970-985.
    6. repec:cup:apsrev:v:88:y:1994:i:01:p:33-47_09 is not listed on IDEAS
    7. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Oxford University Press, pages 265-286.
    8. Wolfgang Mayer & Jun Li, 1994. "Interest Groups, Electoral Competition, And Probabilistic Voting For Trade Policies," Economics and Politics, Wiley Blackwell, vol. 6(1), pages 59-77, March.
    9. Kemp, Murray C. & Khang, Chulsoon, 1975. "A convexity property of the two-by-two model of production," Journal of International Economics, Elsevier, pages 255-261.
    10. Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, pages 719-745.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    tariff; political competition; median voter;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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