Chapter 28 Political economy of trade policy This chapter discusses the political economy of trade policy. In principle a political economy model of trade policy must have four elements. Much of the trade theory is devoted to analyzing the consequences of trade policy for individuals who derive their incomes from different factors of production or sectors. First it must contain a description of individual preferences over the domain of policy choices available to policymakers. Given an underlying economic model of the HeckscherOhlin or RicardoViner type and the presumption that preferences for policy depend only on self interest individuals policy rankings can be deuced on the basis of their factor endowments or sector specific skills. Second the model must contain a description of the way these individual preferences are aggregated and channeled through pressure groups political parties or grass roots movements into political demands for a particular policy or another. This step involves a characterization of the modes of political organization as well as of the forms that political influence takes. The chapter also reviews the choice among alternative trade policy instruments and elaborates the consequences of viewing trade policy from political economy lenses.