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Modelling Reciprocal Trade Liberalization: The Political-economy and National-welfare Perspectives

Arye Hillman (), Ngo Long and Peter Moser

Swiss Journal of Economics and Statistics (SJES), 1995, vol. 131, issue III, 503-515

Abstract: We present results of recent research that provides a positive theory of reciprocal trade liberalization policies by governments with political support concerns. The exchange of market access permits governments to benefit each others' exporters, thereby reciprocally facilitating political-support enhancing income transfers that could not have been made unilaterally. In contrast to the optimum tariff-bargaining literature, our explanation of reciprocal liberalization is consistent with the political-economy explanation of protection, and with the objectives of international trade negotiators who seek to improve foreign market access for their exporters in exchange for "concessions" in opening the access to domestic markets.

Date: 1995
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