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Building Trade Barriers and Knocking Them Down
Author(s) -
Gould David M.,
Woodbridge Graeme L.
Publication year - 1997
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00055
Subject(s) - contest , autarky , economics , free trade , politics , commercial policy , international economics , liberalization , trade barrier , outcome (game theory) , international trade , microeconomics , market economy , political science , welfare , law
This paper examines the dynamic behavior of trade protection and liberalization. Consistent with evidence on the development of trade policies, policy decisions are modeled as the outcome of a political contest between import‐competing interests and exporters. Uncertainty about the success of political contests yields a dynamic equilibrium in which tariffs gradually increase over time. Eventually, increasing tariffs reduce profits in the exporting sector to such a degree that exporters enter the political arena and lobby actively against protection. Depending on the market characteristics, a political contest may generate a liberalization or a move toward autarky.