collusion collective action and protection theory and evidence this paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying we show that greatercollusion reduces firm contributionsto tariff lobbying when the governmentvalues welfare sufficiently and thecross price elasticity between the domesticand foreign goods is sufficiently high the empirical evidence from the u s supports the theory greater collusionreduces the level of pac contributions

political influence motives and the choice between tariffs and quotas abstract tariffs and quotas are not symmetric under a variety of circumstances this paper pursues the implications of one such circumstance domestic market power for the political choice of protectionist instrument in the context of a political support maximization model tariffs dominate quotas in the political model in the absence of revenue seeking motives in the presence of revenue seeking ambiguity arises but limits can be placed on the range of tariff or quota levels also some welfare implications emerge

politicians and protection tariffs and elections in australia an index of manufacturing industry tariff protection is calculated for each australian federal electoral division and used to test for the presence of voting factors in the electoral incidence of tariff protection there is a strong positive relationship between the level of tariffs and the labor vote in an electorate though this is more likely to be evidence for the effect of levels of manufacturing activity than for systematic electoral manipulation of tariffs smaller samples of electorates do suggest that governments shift the largest tariff increases into electorates which they won at the previous election

determinants of bilateral trade protection in this paper determinants of bilateral protection levels are empirically identified when controlling for multilateral trade regulation and importing country specific factors strong empirical support is provided of that three bilateral factors are influencing the bilateral protection level specifically a country s protection level on goods from a trade partner is positively affected by the domestic import penetration of goods produced by the trade partner negatively influenced by the intra industry traded share of these imports and positively affected by the trade partner s protection level on domestic goods moreover very high explanatory values are provided in the cross section estimations indicating that these determinants policy regulations and importer specific factors jointly explain almost all of the variation in bilateral protection levels the results are general in the sense that estimations are performed for a large sample of bilateral trade relations including 22 trade partners that are highly differentiated in terms of country characteristics the overall results indicate that to the extent that policy makers can affect bilateral protection levels under multilateral trade regulation they act on political economy rather than economic goals

political economic markets perts and pests in food and agriculture j i lyniversity of california berkeley jjept of agricultural and resource economic l working paper al cljdare i lorking paper 0 231 politic eco lic l rxets a d pests i j food l ti achiculture by per ts cordon c rausser ja nlnl tt junot tlon a riii ent st ticn giannini fou 1cl itiol1of ar ricultllrnj econo ll i cs july 11 w

positive feedback the impact of trade liberalization on industry demands for protection contrary to widely accepted theories of interest group demand for protection industries that experience high and rising import competition after a reduction in trade barriers often become less rather than more protectionist in the long term to unravel this paradox i propose and test a theory that explains variation in domestic producer groups demand for protection over time this model of industry behavior suggests that trade liberalization has a positive feedback effect on the policy preferences and political strategies of domestic industries compelling them to adjust to more competitive market conditions and thereby reducing their future demand for protection

is protection for sale evidence on the grossman helpman theory of endogenous protection grossman and helpman 1994 present a theory of endogenous protection by explicitly modeling government industry interactions for which mere black box models previously existed they obtain a ramsey pricing type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities on the lobbying side the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection the model not only makes for richer theory in terms of rigor and elegance but its predictions are directly testable whether the grossman helman model stands up to real world data is investigated in this paper predictions from both the protection side and lobbying side are tested using cross sectional u s nontariff barrier data we also compare the second generation grossman helpman model with a more traditional specification our results call for serious consideration of this model in the political economy literature

conflict cooperation and commerce the effect of international political interactions on bilateral trade flows the public choice approach to political economy is employed to gain insight into the connection between international politics and trade flows a model is constructed in which importers are assumed to be rational utility maximizers who seek to satisfy international security as well as economic welfare objectives this model of bilateral trade flows reflects contemporary theory in the field of international economics and it explicitly incorporates the general foreign policy orientation of importers among its determinants the model is tested in 16 annual crosssectional estimations 1960 75 for a complete network of 25 countries the findings show considerable support for the hypothesis that trade flows are significantly influenced by broad political relations of amity and enmity between nations the author concludes that nations adjust trade ties to satisfy security as well as economic welfare goals and that a formal political economy of trade should reflect this fact

time to build and capacity choice abstract this paper studies how demand uncertainty and time to build interact in affecting irreversible investment activity using impulse control methods we find the optimal timing and size of investment for a firm such as an electric utility that considers expanding its capacity in order to meet an uncertain demand when the construction lag is short uncertainty delays investment while increasing its size once it takes place however for comparatively long and realistic times to build the sensitivity to uncertainty is drastically reduced and the results can even be reversed more uncertainty can speed up investment and reduce its size

understanding international trade policies an emerging synthesis the international trade problems of the 1980s stimulated an expansion of scholarship on trade policies by economists and political scientists at least four distinct theoretical perspectives weave their way through recent literature that concentrates on the united states emphasizing market conditions policy beliefs and values national political institutions and global structures respectively new studies in each of these traditions advance beyond the work of their predecessors but none of the perspectives has yet proved adequate as a single unifying vehicle nevertheless we can also see clear movement toward a synthesis with single works blending insights from several traditions thus the books under review do not all fall neatly into the familiar exclusive categories of economics or political science the emerging synthesis needs strengthening in several ways including the development of conditioning hypotheses that will reduce remaining apparent confusions

tariff endogeneity evidence from 19th century europe abstract this paper tests an endogenous tariff model for six european countries from around the mid 19th century until the eve of world war 1 ww1 the tariff rate was generally cointegrated with real gnp real wages the price level and the external trade balance results from granger causality tests suggest that real gnp and the price level may be important endogenous determinants of tariff levels

the political economy of declining industries senescent industry collapse revisited many observers have noted a strong tendency for protection once it is instituted to persist over time this paper first shows that persistent protection arises whenever lobbying is an alternative to costly adjustment with endogenous protection the level of tariffs is an increasing function of past tariffs the more an industry lobbies the greater the current protection it receives and the less it adjusts and the less the industry adjusts the more effective it is as a lobby in the future when the costs of lobbying and adjustment are fully variable declining industries contract more slowly over time and never fully adjust however the paper shows that adding a fixed cost of lobby formation or maintenance is sufficient to generate an endogenous collapse of protection such as that predicted by cassing and hillman 1986 american economic review 76 516 523 in which an industry abruptly terminates its lobbying and loses its protection finally the paper examines the well documented bias against growing industries in the lobbying process

policy choice theory and evidence from commitment via international trade agreements abstract why do governments employ inefficient policies when more efficient ones are available for the same purpose we address this puzzle in the context of redistribution toward special interest groups sigs by focusing on a set of important policies tariffs and non tariff barriers ntbs in our policy choice model a government can gain by committing to constrain tariffs through international agreements even if this leads to the use of less efficient ntbs commitment has political value because it improves the bargaining position of a government that is weak relative to domestic sigs using detailed data we find support for several of the model s predictions including i tariff commitments in trade agreements increase the likelihood and restrictiveness of ntbs but not enough to offset the original tariff reductions ii tariff commitments are more likely to be adopted and more stringent when the government is weaker relative to a sig thus the results can explain the use of inefficient policies for redistribution and suggest that the bargaining motive is an important source of the political value of commitment in international agreements

blending under uncertainty real options analysis of ethanol plants and biofuels mandates abstract the value of a representative ethanol producer that benefits from both low and high gasoline prices in the short run is modeled ethanol producers make a modest competitive profit in the mandate induced region of production a low price of gasoline increases the demand for blend ethanol and consequently increases the profit of ethanol producers on the other hand when gasoline becomes costlier than ethanol the capacity constraints of the biofuels sector bind and ethanol producers gain large quasi monopoly margins this is an interesting example of a market where two commodities are complement up to a point and then substitute after that we postulate the value of an ethanol producer as a strangle option consisting of two real options the option to substitute gasoline at times of expensive crude oil and the option to expand supply of blend at times of cheap gasoline using a dynamic model we show that the higher volatilities of crude oil and ethanol costs increase biofuels firms value we also find non monotonic relationships between the value of an ethanol plant and several underlying variables including gasoline price level we estimate the value provided by a 10 blend mandate to be around 150 000 000 for a representative ethanol unit our results offer a novel view of oil and feedstock price risks in contrast to the common belief that considers those risks as a negative factor for the biofuels sector

energy investment risk assessment for nations along china s belt road initiative abstract overseas energy investment as an effective way of securing energy supply is being favored by the world s leading energy consuming countries however energy investment has the potential high risk on multiple forms including political and regulatory risk currency liquidity and refinancing risk as well as resource risk and so on to effectively evaluate overseas energy investment risk this study proposed a new indicator system from six dimensions furthermore a fuzzy integrated evaluation model based on the entropy weight was constructed to rate the energy investment risk for 50 nations along china s belt road initiative the findings indicate that resource potential and chinese factors have become the main determinant of energy investment risk while environmental constraints and political risk should also be considered for investing decisions in conclusion saudi arabia united arab emirates pakistan kazakhstan and russia are the most ideal choices for china s energy investment balancing resource potential and investment environment

exchange rates and industry demands for trade protection the recent confrontation between china and the united states over currency policy illustrates a broader phenomenon exchange rate misalignments tend to spill over into trade policy although previous studies have shown that aggregate protectionist activity is positively related to the level of the real effective exchange rate we explore this relationship at the industry level several industry specific characteristics determine the protectionist response to exchange rate changes including the degree of exchange rate pass through the level of import penetration and the share of imported intermediate inputs in total industry inputs we find that the marginal effect of currency appreciation on the number of industry level antidumping petitions is positive and significant only for industries with high pass through therefore exchange rates appear to induce demands for trade barriers only in industries where competitiveness is directly harmed by currency appreciation

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

lobbying counterlobbying and the structure of tariff protection in poor and rich countries a political economy model of protection is used to determine endogenously the intersectoral patterns of protection three propositions are derived that are consistent with the stylized patterns of tariff protection in rich and poor countries nominal protection rates escalate with the degree of processing protection is higher on average in poor countries and rich countries protect agriculture relatively more than they protect manufacturing whereas poor countries do the reverse numerical simulations for archetypal rich and poor economies confirm that the endogenously determined structure of protection is broadly consistent with observed patterns of protection

sub national tax autonomy and deficits empirical results for 27 oecd countries van rompuy p sub national tax autonomy and deficits empirical results for 27 oecd countries regional studies this paper explores the impact of the revenue mix on the budgetary performances of regions and local governments in 27 organisation for economic co operation and development oecd countries from 1995 to 2010 the main data are obtained from the oecd fiscal decentralization database that distinguishes tax income according to the degree of sub national control over own resources the empirical results point to a positive impact of autonomous tax income on sub national fiscal balances in contrast to tax sharing agreements however the positive budgetary influence of tax autonomy only prevails from a minimum share of autonomous taxes in sub national own revenue

balancing energy strategies in electricity portfolio management traditional management of electricity portfolios is focused on the day ahead market and futures of longer maturity within limits market participants can however also resort to the balancing energy market to close their positions in this paper we determine strategic positions in the balancing energy market and identify corresponding economic incentives in an analysis of the german balancing energy demand we find that those strategies allow an economically optimal starting point for real time balancing and create a marketplace for flexible capacity that is more open than alternative marketplaces the strategies we proffer in this paper we believe will contribute to an effective functioning of the electricity market

oligopolistic behavior by public agencies in international trade the world wheat market a model of the world wheat market is presented which treats public policies as endogenous the oligopolistic nature of international wheat trade is captured by assuming policy makers form conjectures on the slope of the excess demand function they face and use that information to determine domestic and trade policies the policies reflect differing influences of political interest groups a u s crop shortfall scenario illustrates the different results with endogenous policies compared to the traditional model

on the incidence of us tariffs this paper provides evidence on the incidence of tariffs on products of export interest to developing countries by investigating the relationship between per capita incomes of us trading partners and tariff rates it constitutes the first attempt to assess the incidence of tariffs imposed by the us on countries that span the entire range of per capita incomes average tariff rates are lower for the poorest and richest countries and higher for countries in the middle of the income distribution this finding is not consistent with the widely held view that tariffs used by industrial nations bear more heavily on products of export interest to poorer developing countries than on imports from industrial nations it is consistent with the tariff escalation pattern reported in earlier studies if advanced countries account for most products at the high end of the fabrication scale results show that poorest countries will find it difficult to escape tariffs by attaining higher levels of economic development

persistent protection in an international exit game abstract this paper examines the strategic behavior of two countries in a duopoly exit game with declining demand in the export market we consider whether countries have a strategic rational to maintain rather than unilaterally or jointly reduce their subsidies conditions under which persistent subsidization is justified from a national perspective are derived by maintaining subsidies one country can gain a strategic advantage by forcing its rival to exit earlier an outcome where only one country applies the subsidy is not attainable free trade is less likely to occur close to the end of the game

is environmental policy a secondary trade barrier an empirical analysis should international trade agreements be extended to include negotiations over environmental policy the answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries our results suggest that they do previous studies of this relationship have treated the level of environmental regulation as exogenous and found a negligible correlation between environmental regulation and trade flows in contrast we find that when the level of environmental regulation is modelled as an endogenous variable its estimated effect on trade flows is significantly higher than previously reported jel classification fl f14 f18 est ce que la politique environnementale est une barriere commerciale secondaire une analyse empirique est ce que les accords commerciaux internationaux doivent etre etendus pour couvrir la politique environnementale la reponse depend du degre de distorsion que les pays introduisent dans leur politique environnementale pour proteger leurs industries nationales nos resultats suggerent que cet impact est important des etudes anterieures de cette relation ont traite la politique environnementale comme exogene et ont montre qu il existe une co relation negligeable entre politique envir onnementale et flux commerciaux au contraire nous revelons que quand la politique environnementale est consideree comme variable endoge ne son effet sur les flux com merciaux est plus eleve de maniere significative que ce qu on a note anterieurement

resisting the protectionist temptation industry and the making of trade policy in france and the united states during the 1970s why were advanced industrial states able to keep their economies relatively open to foreign trade in the 1970s and the early 1980s despite declining u s hegemony and increasing economic difficulties this article argues that an international level change affected domestic trade politics and contributed to the maintenance of a liberal trading system examining the united states and france the argument proceeds in two steps showing first how domestic trade politics were changed and second how this change affected the policy process initially i argue that aspects of the increased international economic interdependence of the postwar period altered domestic trade politics by creating new anti protectionist preferences among certain firms firms with extensive international ties through exports multinational production and global intra firm trade have come to oppose protectionism since it is very costly for them evidence for these new preferences was apparent among both american and french industries despite different contexts firms in the two countries reacted similarly to the growth of interdependence next i ask whether firms preferences affected trade policy outcomes and show how these preferences were integrated into the policy process in both countries trade policy structures in neither country prevented firms preferences from affecting the policies adopted even in france a so called strong state firms preferences were a key influence on policy in the trade policy area then the french and american states did not appear to differ greatly in their susceptibility to industry influence even though their policy processes were different

res diffusion and r d investments in the flexibilisation of the european electricity networks abstract the present analysis adds up to the discussion carried around the flexibilisation of the electricity networks as means of higher diffusion of renewable energy sources res inspiring from innovation studies the paper proposes an economic rationale for considering res technology manufacturers as investors in electricity networks moreover the present analysis scrutinize the extent to which the various economic operators within specific segments of the power supply chain invest in a portfolio of research and development activities among which the electricity grids and storage technologies the intensity of these research investments was mapped across the european countries for the year of 2011 their geographic distribution confirms the rationale of an analysis based on canonical correlation testing the associations between res market diffusion and power network indicators the analysis provides useful insights for specific technology such as the one revealing pv market sensitivity to research investments in storage technologies confirming a potential business model coupling the two technologies accommodating this pattern and enabling further diversification of research portfolios the public incentives could be redesigned in order to address the flexibilisation of power networks

explanations of protectionism in international trade votes in this study we analyze the voting records of u s senators on three recent international trade bills our objective is to assess the importance of ideology and constituent interest as forces that influence protectionist vs free trade voting behavior the methodology uses discriminant analysis supplemented with expert judgement the first conclusion is that ideology is the more important force in generic protectionism issues and local constituent interests are more important for commodity specific issues second we find that protectionism is especially associated with liberal ideology high import impact and low export dependence although the discriminant analysis outperforms expert judgement in classifying protectionist vs free trade votes in two of the three bills studied the best explanation is obtained by using both methods together

incremental protection and efficient political choice between tariffs and quotas this paper offers a new political economy explanation for the increasing use in recent years of quotas instead of or in combination with tariffs as a form of trade protection we show that under domestic monopoly the comparative efficiency of tariffs and quotas in achieving political objectives will vary depending on the nature of the mark et and the level of protection at high levels of protection quotas can become more politically efficient than tariffs we also show that at low levels of protection a price equivalent quota may not exist

regulation of international trade in the united states the tokyo round a model based on the economic theory of regulation is used to explain the interindustry pattern of tariff protection that emerged from the tokyo round although tariff reductions were modest and were conducted in large part using a harmonization tariff cutting formula evidence reported here suggests that domestic pressure groups were able to exercise influence over post tokyo round tariff levels results of this analysis provide support for the marvel ray tariff formation model copyright 1987 by the university of chicago

u s corporate interests and the political economy of trade policy this paper examines the behavior of american corporations with respect to international trade policy initiatives during the 1970s using survey generated data on revealed corporate trade policy interests and firmand industry level data on company characteristics direct or proxy variables were developed and applied in linear regression equations using an ordered probit specification and in an alternative approach using factor analysis to construct a composite dependent variable hypothesized relationships were verified between corporate positions on trade liberalization and the intensity of competition from imports the benefits from improved access to foreign markets and internal risk pooling capabilities of firms firms exposed to the international competitive environment inevitably have a stake in national trade policy this paper explores the revealed behavior of u s corporations on matters of trade policy in the 1970s it develops a set of hypotheses linking corporate trade policy positions to a series of company and industry attributes these hypotheses are tested using survey generated information regarding corporate behavior on trade policy matters beginning with the protectionist burke hartke initiatives of the early 1970s through the post tokyo round period at the end of the decade studies of the political economy of protection typically begin with the proposition that import barriers create rents that can be appropriated by the protected industry the size of the rents to be obtained and their probable division among the various participants in the industry partly determine the intensity of protection seeking behavior lobbying undertaken by participants in the industry brock and magee 1978 the intensity is also influenced by the degree of success expected in the political arena and by imperfections in the lobbying process for instance the incentive to be a free rider on the lobbying efforts of others walter and jones 1981 the actual outcome of protection seeking activity is conditioned by a variety of political considerations as well for instance politicians may be constrained by the possibility of repercussions from groups adversely affected by protection including consumers and export oriented industries foreign competitors are also affected so that issues concerning foreign relations enter into the decision process in addition politicians may be influenced more generally by ideology party platforms or attitudes toward equity a number of researchers including ball 1967 fieleke 1976 clark 1980 and ray 1981a 1981b have verified that a significant positive correlation exists between nominal tariff rates or effective rates of protection across manufacturing industries and low skilled labor intensity taken to be an indicator of the intensity of import competition and thus related to the size of the rents that could be obtained by protection cheh 1974 and bale 1977 analyzed the determinants of the percentage reductions in rates of duty resulting from the kennedy round tariff cuts concluding that the cuts were determined in such a way as to minimize labor adjustment costs see also allen lewis and tower 1980 marvel and ray 1983 also explored the determinants of kennedy round tariff cuts finding the size of tariff cuts tended to be smaller if an industry was more concentrated or sold a larger fraction of its output to household consumers and larger if the industry was more intensive in research and development r d or more highly unionized the result for r d presumably represents the desire at the industry level for improved access to export markets achievable through larger reciprocal reductions in protection on the part of foreign countries along somewhat different lines baldwin 1976 analyzed several key congressional votes on the received for publication november 21 1983 revision accepted for publication december 14 1984 new york university the authors are grateful to robert lipsey robert j levenson j peter jarrett and james green for providing data that contributed to this study to jang ro lee ashok chatterjee and monica kaufmann for research assistance and to bill greene for providing advice on the estimation technique and computer program used to perform the statistical analysis thomas a pugel is also grateful for the support of an esmee fairbaim research fellowship at the university of reading 1 in both studies ray also explores nontariff barriers ntbs across u s manufacturing industries aside from finding a positive relationship between tariff rates and ntbs the results are not easily interpreted however there is some inferential evidence in walter 1971 which finds a significant positive relationship between ntb incidence and presumably relatively low skill intensive developing country exports

the political economy of the tariff cycle how can protectionism and free trade succeed one another our answer focuses on the changing balance of private actors political demands these actors acquire interests in tariff policies because their assets are spatially concentrated and trade in these assets is subject to various limitations actors in regions experiencing no new investment in an established industry old regions have interests that sometimes differ from those in regions where there is new investment we show that old regions have no reason to be involved in tariff politics at business cycle peaks during troughs whether a state becomes more or less protectionist depends ceteris paribus on the relative political strength of old import competing and old exporting interests if old import competing industries outweigh the old exporters then protection will tend to increase at the trough and decrease at the peak of a business cycle the opposite result occurs when old exporters are more influential

politically realistic objective functions and trade policy profs and tariffs abstract this paper demonstrates a mathematical correspondence between the deus ex machina tariff formation approach and political economy approach the correspondence implies that the tariff chosen by lobbying influenced policy makers will be equivalent to a tariff chosen by a deus ex machina government that gives too much weight to profits this result allows many political economy issues to be addressed in the simple framework of a deus ex machina government which faces a politically realistic objective function prof

unprotective tariffs ineffective liberalization and other mysteries an investigation of the endogenous dimensions of trade policy formation in australia 1 introductionsince its formation as a federation in 1901 australia embraced a fairly comprehensive tariff schedule in relation to imported manufactures 1 tariff rates fluctuated considerably over the years however over the course of the century they remained sufficiently high to earn australian manufacturing the reputation of one of the most heavily protected manufacturing sectors in the industrialized world 2 in recent years a number of liberalization waves have surfaced the most notable of these took place in 1973 1977 1988 1991 and most recently in 1994 with the signing of the uruguay round of the gatt agreement still tariffs remain a principal actor in australia s menu of industrial policies in a recent edition of the annual report of the productivity commission 3 published in november 1999 it is noted that although tariffs have dropped considerably since 1994 they remain an important form of assistance tariff assistance still accounts for around 90 of measured effective assistance to the manufacturing sector 4 p 52 given the pervasiveness of australian tariff policy the significant welfare implications of changes in that policy and the particular importance of international trade for this country ensuing from its idiomorphic cultural resource endowment and geographic characteristics 5 considerable research effort has been invested in the examination of various dimensions of this issue at the forefront of pertinent empirical research two items have attracted considerable interest 1 the host of determinants of the highly dispersed tariff concessions and 2 the impact of liberalization on imports research that falls in the category that examines the former including anderson 1980 conybeare 1984 aislabie 1988 and feaver and wilson 1998 is consistent at varying degrees with the theory of endogenous trade policy formation 6 according to the foundations of this theory tariff concessions may be viewed as public outcomes that facilitate a political equilibrium the mechanics are rather elementary when the profit loss that arises from import competition exceeds the transaction cost of a successful lobbying campaign for protection private interests will undertake such lobbying activities the higher the loss from foreign competition the more fervent the lobbying effort hence an increase in import penetration is likely to trigger greater protection7 trefler 1993 p 139 unlike this line of inquiry the critical causal relationship of interest to studies that fall in the category that investigates item 2 including simmons and smith 1994 relates to the effects of tariff changes on imports rather than the reverse the causal directions of the nature examined by studies that investigate issues 1 and 2 are of course not mutually exclusive higher import penetration increases tariffs and higher tariffs in turn decrease import penetration however despite the simultaneity of these variables studies of australia s trade policies associated with research lines 1 and 2 followed separate paths by only considering unidirectional causal relationships and yet these paths do converge the meeting point perplexing results on the one hand studies of endogenous protection such as anderson 1980 and aislabie 1988 have consistently failed to establish the expected result that an increase in import penetration will lead to higher tariffs on the other studies of trade liberalization often find that tariff reduction shave asurprisingly small effect on imports with a study by simmons and smith 1994 concluding that at least in relation to the examined industry removal of the tariff would have no effect on the level of imports p 57 it is important to note that analogous and equally puzzling findings pertaining to improbably smalle ffect so fliberalization on imports have been identified in the caseofothercountries suchastheunitedstates byanumberofauthors

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

fiscal decentralization and economic growth abstract fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped a fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth we argue that much work remains to be done before policy advisors and decision makers can formulate and implement decentralization programs on the basis of improving the rate of economic growth

the bias in favor of pro tariff lobbies abstract we show that the probability of success of the pro tariff lobby defined as a decreasing function of the ratio of consumer loss to producer gain rent generated by the tariff rises with the tariff under very general conditions this appears as an exception to becker s view that less distortionary measures tend to be adopted over their more distortionary counterparts we then provide a micro foundation for our probability definition using the imperfectly discriminating lobbying framework

protectionist responses and declining industries abstract this paper employs a three factor ricardo viner model of a small economy to analyse the effect of a falling world import price on the domestic price of the economy s importable good in the presence of an endogenously determined tariff the outcome is seen to depend on a the way in which the recycled tariff revenue is allocated to the three factor groups and b differences in relative risk aversion across those groups however under reasonable assumptions hillman s 1982 result that a declining industry will continue to decline is seen to hold in our general equilibrium framework

why and when do governments initiate public enterprise reform initiating public enterprise reform is a complex decision influenced by economic factors as well as the ideological biases and personalities of political leaders nevertheless the use of a contracting framework yields important generalizations about what drives the decision this article argues that the decision depends fundamentally on the potential efficiency gains from the reform and its associated transactions costs costs arise because of asymmetries in information and opportunism problems that usually plague contract negotiations the article identifies observable variables that may affect either the potential gains or the transactions costs uses them to construct a simple probit decision making model and tests the model using data from fifteen developing countries over a twenty year period

understanding the soft budget constraint we propose a clarification of the notion of a soft budget constraint a concept widely used in the analysis of socialist transitional and market economies our interpretation is broad enough to embrace most existing approaches to soft budget constraint phenomena and provides a classification of their causes and consequences in light of this interpretation we then review the theoretical literature on the subject and compare it with those on other dynamic commitment problems in economics

endogeneous protection factor returns and resource allocation we consider a heckscher ohlin samuelson trade model with two lobbies representing the interests of factor owners and two political parties the lobbies contribute resources to politics equating their returns to political and economic activity at the margin while the parties maximize their probability of election trading off general voter dissatisfaction with protection against the electioneering resources that favorable policies attract from the lobbies the equilibrium level of protection of a factor and its expected rate of return increase with its relative endowment if this relative endowment is high low then the factor will be better worse off than under free trade but at intermediate factor endowment ratios both factors will be worse off under parameter changes making lobbies more sensitive to the commodity price the lobbies contribute more resources to politics and can both be worse off even though the parties are proposing lower trade distortions

unemployment collective bargaining and the demand for protection there is a widespread consensus among nonacademic observers that labor unions with large numbers of unemployed members have been central actors in political coalitions demanding protectionist trade policies since the mid 1970s in advanced industrial societies yet trade unions and unemployment are hardly mentioned in most theories of the politics of international trade the purpose of this paper is to develop a theoretical framework for understanding the importance of unemployment as a determinant of protectionist demands that is consistent with optimizing behavior on the part of union members and firms models of labor negotiations derived from cooperative bargaining theory are used to illustrate why the material benefits of protection received by union members and their employers in protected industries increase when union members are unemployed even when workers are risk neutral and capital is immobile

tariffs subsidies and welfare with endogenous policy abstract it is a well established proposition of trade theory that in the absence of directly trade related distortions or policy goals subsidies are superior to tariffs for achieving any economic or non economic objective this paper shows that once the endogeneity of the distortion or non economic objective is allowed for the welfare ranking of various policies can be reversed the particular model analyzed is one where the level of non economic objectives that have to be fulfilled itself depends on the policy tools considered to fulfill them with this arises from the public good nature of tariffs compared to subsidies

nontariff barriers and trade liberalization i introduction it is common to recognize that tariffs have gradually been replaced by nontariff barriers ntbs some authors go even further and argue there is a law of constant protection an expression used by bhagwati 1988 mainly to dismiss the idea baldwin 1984 600 for instance writes not only have these measures become more visible as tariffs have declined significantly through successive multilateral trade negotiations but they have been used more extensively by governments to attain the protectionist goals formerly achieved with tariffs the purpose of this article is to set up a model in which the effect of trade liberalization on the use of quotas and antidumping laws can be investigated directly we analyze two types of bilateral trade liberalization tariff reductions and quota elimination we show that our model is consistent with a progression from the use of tariffs only to the use of quotas following tariff liberalization to the use of antidumping laws when quotas have been jointly tarrified second it is also consistent with a narrowing of the range of industries in which each of these instruments is used third the extent of bilateral tariff liberalization and the ensuing degree of replacement of tariffs by ntbs depend on the combination of two industry specific characteristics the government s preferences for domestic firm profits and the importance of international transport cost in the industry overall our results suggest that treaties that remove or reduce one type of distortion may lead to the use of other policies tha t are even worse but despite the use of ntbs overall trade is more liberal to show these results we use a standard two country model with two way trade where the policy maker s objective function is quasi concave this last characteristic is important to explain some of the results as it leads to strategic complementarity in the tariff game and to the possibility of interior solutions in the quota game our results appear to track three separate sets of empirical facts well first evidence shows that there is a clear emergence of quantitative restrictions in the 1960s in manufacturing sectors and in developed economies followed by an explosion in the use of antidumping constraints since the 1980s 1 the emergence of these two ntbs can be linked to preceding multilateral trade rounds and in particular to the completion of the kennedy round today the general agreement on tariffs and trade gatt 1990 10 notes that despite a recent decline in the number of anti dumping investigations initiated in the united states and the european communities anti dumping remains after tariffs the most frequently invoked trade policies in these countries antidumping measures are also spreading to developing countries nogues 1993 quantitative restrictions are meanwhile on the decline as signatories of the uruguay round agreement are now required to tariffy existing quotas and constrain their future use gatt 1990 documents specific import quotas import licensing restrictions and items subject to import prohibition that have been eliminated in recent years second the gradual replacement of trade tools has also been accompanied by a reduction of the number of sectors affected by ntbs whereas very few products were traded without levy before the various gait rounds renner 1971 finds that 7 of the four digit product classes were affected by quantitative restrictions in the united states and in the european communities in 1970 the number of antidumping cases in the european communities initiated and or ending up with a positive decision represents a fraction of this number see gait 1993b mainly concentrated on a very small number of sectors see messerlin and reed 1995 of course it is not because a smaller number of sectors are affected by ntbs that overall protection necessarily decreases however given the high rates of growth in world trade it seems likely that despite this substitution the overall level of protection has decreased over time

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

cooperative lobbying and endogenous trade policy this paper considers trade policies in a small open economy in which two influential interest groups lobby the government since competitive lobbying leads to excessive rent seeking expenditures the lobbies have an incentive to cooperate the outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups two important results are derived first if the power of competing interest groups is balanced then cooperation leads to free trade second if it is unbalanced cooperation may on the contrary increase protection

investment firm value and risk for a system operator balancing energy grids abstract with the liberalization of energy markets integrated energy companies have separated into entities that specialize in production and or transmission of energy transmission of energy requires balancing the grid to guarantee system security which is performed by the independent system operator so when the so faces stochastic demand grid balancing has sizeable consequences on current and future profits and hence on firm value and firm risk we explore these value and risk consequences with and without an investment option to expand transmission capacity we show that firm value consists of the value of the transmission capacity in place plus the value of a short put and a short call option that are the result of the so s balancing actions firm risk without investment option is non linear and determined by the short option positions it is decreasing with increasing energy demand the existence of an option to expand transmission capacity increases firm value and firm risk

trade policy making in a model of legislative bargaining in democracies trade policy is the result of interactions among many agents with different agendas in accordance with this observation we construct a dynamic model of legislative trade policy making in the realm of distributive politics an economy consists of different sectors each of which is concentrated in one or more electoral districts each district is represented by a legislator in the congress legislative process is modeled as a multilateral sequential bargaining game a la baron and ferejohn 1989 some surprising results emerge bargaining can be welfare worsening for all participants legislators may vote for bills that make their constituents worse off identical industries will receive very different levels of tariff the results pose a challenge to empirical work since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations some of them random realizations of mixed bargaining strategies

federalism and the soft budget constraint the government s incentives to bail out inefficient projects are determined by the trade off between political benefits and economic costs the latter depending on the decentralization of government two effects of federalism are derived first fiscal competition among local governments under factor mobility increases the opportunity costs of bailout and thus serves as a commitment device the competition effect second monetary centralization together with fiscal decentralization induces a conflict of interests and thus may harden budget constraints and reduce inflation the checks and balance effect the authors analysis is used to interpret china s recent experience of transition to a market economy copyright 1998 by american economic association

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

some empirical evidence on rent seeking we tested for the capture of net gains by winners in rent seeking competitions using the most prominent announcements of government favors in the canadian economy over a twelve year period stockholders returns were not significantly different from zero one possible explanation is that government assists firms only when assistance creates political gains refusing to transfer economic rents to firms maximmizes the resources available to serve political purposes this kind of behavior by government officials would imply that government has market power which is consistent with several well known theories of government

living wages protection for or protection from low wage workers living wage laws are touted as anti poverty measures yet they apply to only a small fraction of workers most commonly covering only employers with city contracts the apparent contradiction between broad anti poverty goals and narrow coverage suggests that goals other than poverty reduction may partly underlie living wage campaigns this paper considers the hypothesis that living wage laws act to maintain or increase rents among unionized municipal workers by raising the wages that city contractors would have to pay living wage laws may reduce the incentives for cities to contract out work that would otherwise be done by unionized municipal employees hence increasing the bargaining power of municipal unions and leading to higher wages for their members the evidence presented here from an analysis of cps data for 1996 2000 indicates that the wages of unionized municipal workers are indeed increased as a result of living wage laws covering contractors

firm participation in steel industry lobbying firm participation in steel industry lobbying i introduction what are the causes of recent protectionist pressure exerted by u s import competing firms studies by coughlin terza and khalifah 1989 feigenbaum and willett 1985 and takacs 1981 examine the empirical relationship between macroeconomic conditions and the aggregate frequency of escape clause petitions file by u s manufacturing firms although the results are mixed as to whether international macroeconomic performance influences the demand for protection the studies indicate that domestic macroeconomic conditions significantly influence the frequency of escape clause petitions 1 as important as these are to understanding the underlying sources of protectionist pressure they do not address another equally important aspect of protectionist pressure the determinants of a single industry s demand for protection the fact that most protectionist pressure results from actions taken by individual industries underscores the importance of understanding the determinants of industry pressure indeed most trade legislation is designed to respond to the problems of individuals sectors of the economy in this paper we empirically examine the microeconomic determinants of the protectionist pressure exerted by the u s steel industry in antidumping and countervailing duty cases from 1982 after the trigger price mechanism was abolished to 1986 the steel industry is a particularly attractive subject for empirical analysis since no other industry pushed more aggressively for protection during the 1980s in recognizing that the degree of pressure exerted by an industry is the aggregate result of decisions made by individual firms to contribute to a collective action the microeconomic approach offers two advantages over previous studies 2 first to explain industry pressure we model the decision of the representative firm taking into account the incentives that a firm faces in a collective setting for example we recognize that the benefits of antidumping and countervailing duties have characteristics of a public good so that individual firms may have an incentive to free ride a proposition supported by the empirical results second we specify microeconomic variables that reflect the economic conditions facing the representative firm in the steel industry rather than macroeconomic variables which may not accurately measure the economic performance of specific industries or the international pressures they face in contrast to previous studies which found a significant relationship between macroeconomic performance and aggregate pressure we do not find that the steel industry s economic performance influences the degree of industry pressure our second objective is to examine the policy implications of free riding by testing the relationship between the effectiveness of a coalition of firms and the degree of protection actually received if an effective coalition of firms can influence the policy outcome then antidumping and countervailing duties are more likely to be provided to segments of the steel industry that can minimize the free rider problem since these segments are not necessarily those that absorb the greatest injury u s trade policy may not be meeting its goal of providing greater relief to firms most injured by dumped or subsidized imports the results confirm the proposition that segments of the steel industry which are injured by dumped or subsidized imports and which can organize an effective coalition do in fact receive greater protection than those segments that are merely injured ii the representative firm s decision to contribute to a less than fair value action to obtain protection from alleged less than fair value lfv imports imports that are either dumped by foreign firms or subsidized by foreign governments firms representing a domestic industry must file a complaint of foreign dumping or export subsidization with the international trade administration ita which then determines the magniture of dumping or subsidization

the kennedy round evidence on the regulation of international trade in the united states the purpose of this paper is to analyze and provide empirical evidence regarding the regulation of international trade flows our goal is to provide an explanation of the changes in the interindustry pattern of trade restrictions which emerged from the kennedy round of tariff negotiations the principal conclusion of the analysis is that the pattern of protection which resulted from the kennedy round was shaped to minimize the domestic political disruption resulting from liberalization industries which faced significant import threats and whose characteristics enhanced their potential political influence were able to maintain tariff protection in the face of overall liberalization the potential impact of the agreed upon tariff reductions was partially undermined by the introduction of offsetting nontariff trade barriers ntbs in addition ntbs were introduced systematically in industries that were becom

the environmental bias of trade policy author s shapiro joseph s abstract this paper documents a new fact then analyzes its causes and consequences in most countries import tariffs and non tariff barriers are substantially lower on dirty than on clean industries where an industry s dirtiness is defined as its carbon dioxide co2 emissions per dollar of output this difference in trade policy creates a global implicit subsidy to co2 emissions in internationally traded goods and so contributes to climate change this global implicit subsidy to co2 emissions totals several hundred billion dollars annually the greater protection of downstream industries which are relatively clean substantially accounts for this pattern the downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized a quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods global co2 emissions would decrease and global real income would change little

interest groups campaign contributions and probabilistic voting this essay develops a simple model to analyze the impact of campaign contributions on electoral policy decisions of candidates for office interest groups here are firms that select contributions under the assumption that candidates policies and opposing groups donations remain unaltered candidates however recognize that their policy choices affect contributions campaign contributions are used by candidates to affect policy oriented voters perceptions of candidates positions in this framework the introduction of campaign contributions may affect candidates electoral policies and if they do then they benefit surely exactly one of the two interest groups

the newly industrializing countries in the international system explanations of the growth of the newly industrializing countries nics by neoclassical economists and dependency theorists neglect the role of politics in shaping development strategies different social configurations state structures and ideas about development help explain the divergent policy choices made by the export oriented east asian nics korea and taiwan and the more inward looking countries of latin america particularly mexico and brazil these different strategic choices in turn account for variations in the patterns of external dependency that characterize countries in the two regions

jobs jobs jobs a new perspective on protectionism this paper analyzes the determinants of protectionism in a small open economy with search frictions in this environment jobs generate rents whose access depends on the level of trade protection by raising the domestic price of a good a government may attract more firms in a particular industry this raises the probability that workers will find jobs in this sector and in turn will benefit from the associated rents though simple this channel may help explainavarietyofstylizedfactsonthestructureoftradeprotectionandindividualtrade policy preferences jel f130 f160

the impact of special interests on preferential tariff concessions by the united states this paper provides empirical evidence on the rela tive impact of the generalized system of preferences gsp adopted in 1975 and the caribbean basin initiative cbi adopted in 1983 on the pattern of u s imports of manufac tured goods from the target areas at the four digit level in 1984 imports from brazil mexico south america the carib bean basin and from all eligible countries are each analyzed we provide evidence that existing preferential agreements have failed to offset the bias in u s protection against competitive exports from developing countries we also explain why one might have predicted such an outcome

environmental regulations transfers and trade theory and evidence abstract this paper develops a theory of compensation of producers for the costs associated with environmental regulations we show that the existence of transfers can give counter intuitive effects of environmental policy on both output and trade flows in particular the compensation obtained by producers neutralizes the effect of environmental policy on output and consequently on trade flows this may help explain why previous empirical research has found weak evidence that environmental regulations affect trade patterns the theory is tested using agricultural sector data the evidence supports the hypothesis that environmental regulations and transfers are positively correlated

designing tax policy in federalist economies an overview abstract the emerging economic federations of the european union russia and south africa along with the established federations in australia canada and the united states confront the task of designing the institutions for federal fiscal policy this paper reviews the literature on the design of tax policy in federalist economies we conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities the usual assignment view of federalis recommends central government policies for example resident based taxation or grants in aid to correct these failures these recommendations assume that the central government will act as a benevolent social planner the political economy view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered alternative legislative structures and constitutional rules are considered

a dynamic model of endogenous trade policy empirical evidence suggests that past levels of protection are significant determi nants of current levels of protection we investigate dynamic interactions among interest groups and resulting endogenous links between current and future trade policies we explore these intertemporal links in a small open economy in which lobbying and tariff policies are the outcome of a dynamic game among factor owners the model can generate cycles with prolonged periods of free trade and or prolonged periods of restricted trade i e persistent trade policies an interesting aspect of the environment is the role of lobbying as a partial

explaining price policy bias in agriculture the calculus of support maximizing politicians a model is developed to explain observed patterns of policy intervention in agriculture we analyze the interaction between political support seeking politicians and supportsupplying citizens society consists of a rural and urban group we determine the effects on transfers of relative group size disparities in income endowments between groups and the deadweight loss of redistribution the framework advanced is an alternative to that of the interest group model and is used to explain for example why the export sectors in developing countries are taxed more and why the united kingdom is less adamant for higher price supports than germany

industry rent seeking and the filing of unfair trade complaints abstract this paper adopts a rent seeking framework to explain the incidence of antidumping and countervailing duty complaints brought to the u s international trade commission and the department of commerce tobit analysis on all 3 digit sic industries is employed to examine the relationship between the frequency of unfair trade complaints and such factors as industry concentration unionization capital intensity and levels and or changes in employment price cost margins and import penetration large capital intensive industries particularly those facing employment losses and rising import shares are found to be most likely to file complaints protection of quasi rents accruing to capital and labor rather than protection of monopoly returns appears to be the primary impetus behind the filing of unfair trade complaints

divided government and u s trade policy theory and evidence if different parties control the u s congress and white house the united states may maintain higher import protection than otherwise this proposition follows from a distributive politics model in which congress can choose to delegate trade policymaking to the president when the congressional majority party faces a president of the other party the former has an incentive to delegate to but to constrain the president by requiring congressional approval of trade proposals by up or down vote this constraint forces the president to provide higher protection in order to assemble a congressional majority evidence confirms that 1 the institutional constraints placed on the president s trade policymaking authority are strengthened in times of divided government and loosened under unified government and 2 u s trade policy was significantly more protectionist under divided than under unified government during the period 1949 90

fiscal decentralization and intergovernmental fiscal relations a cross country analysis abstract fiscal decentralization consists primarily of devolving revenue sources and expenditure functions to lower tiers of government by bringing the government closer to the people fiscal decentralization is expected to boost public sector efficiency as well as accountability and transparency in service delivery and policy making decentralization also entails greater complexity in intergovernmental fiscal relations and coordination failures in fiscal relations are likely to have a bearing on fiscal positions nationally and subnationally evidence provided in this paper for a sample of 30 countries suggests that coordination failures in intergovernmental fiscal relations are likely to result in a deficit bias in decentralized policy making particularly in the case of developing countries which may not meet important requirements for successful decentralization

the textile bill of 1985 the determinants of congressional voting patterns the following tables show the results of the probit analysis for the senate and the house a table including results for different combinations of the independent variables is included in an unpublished appendix available from the authors upon request the results of the probit analysis for the senate are shown in table 1 all the variables except exp had the expected signs however the results indicate that the two other employment variables and party affiliation are the only factors which we can say with confidence influenced a senator s decision to vote for or against this bill the coefficients reported and labeled der of prob measure the derivative of the probability of a yes vote evaluated at the means of the independent variables in question thus for example the coefficient for unemp in the top line of table 1 should be interpreted as indicating that a one percentage point increase in a state s unemployment rate will cause a 5 89 increase in the probability that the senator will vote for the bill the result for dr the party of the senator shows that in general democrats are more apt to vote for protectionist policies than are republicans this is consistant with president reagan s negative stand on the bill and his threat to veto it should it pass the amendment in question passed the senate on 24 october 1985 by a vote of 54 for to 42 against but the bill it was attached to has been postponed indefinitely the house bill which was passed on 10 october 1985 by a vote of 262 for to 159 against was vetoed by reagan on 17 december 1985 the results of the probit analysis for the house of representatives are shown in table 2 state employment data was used for the house as opposed to data for each voting district this was done for three reasons first employment data is usually reported by state or by county since counties are often divided by congressional district boundaries much personal judgement would be necessary to assign employment figures second the most recent county industry employment data is from 1981 while the data used in this analysis is from 1984 third we feel that in general logrolling is prevalent among a state s representatives for this bill the representatives from twenty six states voted as a block and in all but six states one third or less of that state s representatives voted contrary to the majority all of the probabilities are significant at the 05 confidence level representative s voting patterns are influenced by all of the included factors when unionization is added to the equation its coefficient is very small and negative although it is significant at the 05 confidence level one would expect more significance here since there are more degrees of freedom for the house analysis than for that of the senate when the data from the house and senate are pooled the results are similar to those of the house alone the null hypothesis that the data cannot be pooled was tested using a statistic with eight degrees of freedom 9 721 meaning that the null hypothesis is rejected as in the senate the state unemployment rate and the percent employed in textiles are important influences on the representative s vote and democrats in the house are more likely to vote for protectionist bills than republicans however unlike the senate the percent of a representative s campaign contributions that are donated by industry special interest groups has a significant effect on voting patterns although the point estimates for the magnitudes of the influence are very similar in both cases seventy four percent of the house received campaign contributions from these special interest groups while only 54 of the senate received contributions from these same sources this is probably because only one third of the senate was up for reelection during the time period considered while the entire house was in the process of campaigning for reelection exports also play a role in influencing the probability of a yes vote reducing this probability as employment in export industries increases but the magnitude of the coefficient is only 11 of that for textile employment the significance of this variable in the house is probably due to fear of retaliation expressed by both democrats and republicans this variable was not significant in the senate model most likely because the senate version excluded from the 1 import quota growth rate many countries who might have retaliated representatives appear to respond to a wider variety of constituent interests than do senators while senators voting patterns are only significantly influenced by their political affiliation their state s unemployment rate and the importance of textiles to their state the voting behavior of representatives is influenced by these factors as well as the importance of exports to their state and campaign contributions by textile special interest groups these results affirm the validity of the approach used by baldwin and coughlin they differ from baldwin who finds exports are not a significant influence on the house and from coughlin who does not include export employment as an explanitory variable or analyze the differences in voting patterns between the house and the senate

the political economy of the european customs classification customs classification is an important element in a country s trade policy how a good is classified can affect the rate of duty that applies the coverage of non tariff barriers and the formulation and application of rules of origin reclassifications can occur because of the introduction of a new product but also because of protectionist motives this paper is the first attempt at explaining these reclassifications focusing on the european union i examine whether the number of tariff lines in an industry result from the introduction of new products or from protectionist lobbying the analysis focuses on 90 manufacturing industries over 12 years results suggest that protectionist lobbying does play a role in explaining changes in the eu s customs classification

political systems and distortions an empirical study this paper studies empirically why price distortions are more prevalent in some countries than in others we find no significant difference between democracies and dictatorships but frequent regime changes reduce distortions political systems factional subordinate that encourage redistributive activities rda tend to have more distortions allowing for different effects of rda in democracies and dictatorships there is a positive and significant effect of rda on distortions in dictatorships in democracies distortions destroying lobbying seems more important since no significant relation between rda and distortions can be found

the determinants of exit in an open economy in this paper the determinants of exit are investigated for the manufacturing sector of the united states economy which has been subjected to growing international influences the analysis uses united states cross sectional data the results of the exit equation suggest that low profitability declining industry growth and displacement of incumbents by entrants foster exit international influences are also seen to have an impact on u s manufacturing exit specifically imports into an industry have a small effect on exit and protection has little influence in stemming exit

domestic content legislation house voting and the economic theory of regulation house voting on domestic content legislation provides a rare opportunity to examine the political economy of protectionism with respect to a particular issue rather than by using the traditional interindustry approach the results indicate that a representative s vote in favor of the content legislation and the intensity of the legislator s preferences are positively related to the importance of the auto and steel industries in the representative s district an increasing unemployment rate campaign contributions from labor groups affiliation with democratic party and a liberal ideology despite ideology s statistical significance the results suggest this variable can be disregarded because neither the predictive accuracy nor the explanatory power of the model is improved by its inclusion the estimates also provide insights concerning the impact of changes in the independent variables upon voting patterns

between free trade and protectionism strategic trade policy and a theory of corporate trade demands conventional theories of the political economy of trade argue that industries in import competing businesses favor protectionism while multinational firms and export dependent corporations advocate unconditional free trade however many multinational industries have recently advocated strategic trade policies that is they are willing to support free trade at home only if foreign markets are opened or foreign governments reduce subsidies to their firms if demands for strategic trade policy were adopted by the united states they could represent a threat to the general agreement on tariffs and trade gatt and the multilateral trading system this article seeks to explain the emergence of these new corporate trade demands and thereby broaden theories of the political economy of trade the article begins with the widely supported position that multinational and export oriented firms prefer unconditional free trade building on concepts from theories of industrial organization and international trade the article then hypothesizes that rising economies of scale and steep learning curves will necessitate that these firms have access to global markets via exports if growing dependence on world markets is combined with foreign government subsidies or protection the trade preferences of firms will shift from unconditional free trade to demands that openness at home be contingent on openness overseas the manner in which firm demands then get translated into industry demands will vary with the industry s structure if the industry consists of firms with symmetric strategies it will seek strategic trade policy but if the industry is highly segmented it will turn toward protectionism the article concludes with a preliminary test of these hypotheses in four brief studies of the politics of trade in the semiconductor commercial aircraft telecommunications equipment and machine tool industries

lobbying and adjustment in declining industries abstract this paper explains the persistence of protection in terms of interaction between industry adjustment lobbying and the political response faced with a trade shock owners of industry specific factors can respond in two ways they can undertake costly adjustment or they can lobby politicians for trade protection and thereby mitigate the need for adjustment the choice will depend on the relative returns from adjusting relative to lobbying by introducing an explicit lobbying process it can be shown that the current level of protection is an increasing function of past protection and that declining industries contract more slowly over time the more responsive are politicians to lobbying in addition the model makes clear that the type of senescent industry collapse predicted by cassing and hillman 1986 is only possible under fairly special assumptions about the technology of lobbying

public policies pressure groups and dead weight costs abstract this paper presents a model of competition among special interest groups for political influence each active group exerts pressure to affect its taxes and subsidies where activities of different groups are related by the equality between total tax collections and total tax subsidies the dead weight costs and benefits of taxes and subsidies play a major role in our model an increase in the dead weight cost of taxation encourages pressure by taxpayers while an increase in the dead weight costs of subsidies discourages pressure by recipients various applications of the analysis are discussed