Reciprocated unilateralism in trade policy

Pravin Krishna and Devashish Mitra ()

Chapter 3 in The Political Economy of Trade Policy:Theory, Evidence and Applications, 2016, pp 37-63 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Using the menu-auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous, this paper analyzes the impact of unilateral trade liberalization by one country on its partner's trade policies. We find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country. Intuitively, unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import-competing lobby there for lower protection.

Keywords: Political Economy; Protection; Trade Policy; Tariffs; Subsidies; Reciprocal Trade Liberalization; Unilateral Trade Liberalization; Unilateralism; Reciprocity; Lobbying; Median Voter Models (search for similar items in EconPapers)
Date: 2016
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Journal Article: Reciprocated unilateralism in trade policy (2005)
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