Protectionist demands in globalization

Arzu Kıbrıs, Özgür Kıbrıs and Mehmet Gurdal
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Arzu Kıbrıs: University of Warwick

Review of Economic Design, 2022, vol. 26, issue 3, No 6, 345-365

Abstract: Abstract We construct a game theoretic model that offers to explain the increase in trade protectionism as a rational reaction of the voters to their increased concern that the policy choices of their governments are being influenced by international actors. More specifically, we construct a small open economy in which the citizens declare their most preferred tariff rate on an import good to their government. While the government has incentive not to deviate too much from the publicly demanded tariff rate, its final decision is determined after bargaining with a foreign lobby which offers benefits to the government in return of lowered tariffs. We show that the expectation of such foreign influence affects the citizens’ voting behavior. Namely, they tend to vote for more protectionist policies. Moreover, this behavior leads to an increase in benefits by the foreign lobby to the government.

Keywords: Open economy; Tariffs; Bargaining; Voting; Manipulation; Bayesian game (search for similar items in EconPapers)
JEL-codes: C7 D72 F13 F5 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Protectionist demands in globalization (2000)
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DOI: 10.1007/s10058-021-00275-2

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