Building Trade Barriers and Knocking Them Down

David Gould and Graeme L Woodbridge

Review of International Economics, 1997, vol. 5, issue 2, 256-71

Abstract: 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. Copyright 1997 by Blackwell Publishing Ltd.

Date: 1997
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