Endogenous Export Subsidies as a Revenue-Seeking Activity: Some Implications for the Evolution of Protection

Paul Pecorino ()

Canadian Journal of Economics, 1999, vol. 32, issue 3, 785-798

Abstract: Explaining the antiexport bias of trade policy requires a model in which there is some asymmetry between protection of the import competing and export sectors. One asymmetry is that export subsidies require government expenditure, while import tariffs raise revenue for the government. A model is developed where lobbying for export subsidies is treated as a revenue-seeking activity. In contrast with the import-competing sector, it is found that there is no presumption that 'vicious circles' exist in the export sector, where a vicious circle refers to the tendency for exogenous political shocks to be amplified by an endogenous lobbying response.

Date: 1999
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