A Simple Model of the Juggernaut Effect of Trade Liberalisation

Richard Baldwin and Frederic Robert-Nicoud

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper posits a formal political economy model where the principle of reciprocity in multilateral trade talks results in the gradual elimination of tariffs. Reciprocity trade talks turn each nation's exporters into anti-protectionists at home; they lower foreign tariffs by convincing their own government to lower home tariffs. Due to the new array of political forces, each government finds it politically optimal to remove tariffs that it previously found politically optimal to impose. The one-off global tariff cut then reshapes the political economy landscape via entry and exit - reducing the size/influence of import-competing sectors and increasing that of exporters. In the next round of trade talks governments therefore find it politically optimal to cut tariffs again. The process may continue until tariffs are eliminated.

Keywords: Trade policy; Economic integration (search for similar items in EconPapers)
JEL-codes: F13 F15 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-int and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: A simple model of the juggernaut effect of trade liberalisation (2015)
Working Paper: A simple model of the juggernaut effect of trade liberalisation (2008)
Working Paper: A Simple Model of The Juggernaut Effect of Trade Liberalisation (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0845

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