Electoral Competiton and Optimal Tariffs

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.

Keywords: tariff; political competition; median voter (search for similar items in EconPapers)
JEL-codes: F13 F14 P16 (search for similar items in EconPapers)
Date: Written 2005-09-05
Note: Type of Document - pdf; pages: 24. Please contact the author for the detail mathematical proof if interested.
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