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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References listed on IDEAS
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- Grossman, Gene M & Helpman, Elhanan, 1996.
"Electoral Competition and Special Interest Politics,"
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Wiley Blackwell, vol. 63(2), pages 265-86, April.
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- repec:cup:cbooks:9780521377003 is not listed on IDEAS
- Kemp, Murray C. & Khang, Chulsoon, 1975. "A convexity property of the two-by-two model of production," Journal of International Economics, Elsevier, vol. 5(3), pages 255-261, August.
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- Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, vol. 78(4), pages 719-45, September.
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