Import Peneteration and the Politics of Trade Protection

Giovanni Maggi and Andres Rodriguez-Clare

No 6711, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we reconsider a key empirical prediction generated by an important class of political-economy models of trade policy, namely that trade protection should be higher in sectors characterized by lower import penetration (we call this the little support for this prediction. In this paper we argue that the standard prediction depends critically on the assumptions that trade taxes are the only policy instruments and that the government has access to non-distortionary taxation. We analyze a model in which the government can use quotas and VERs in addition to trade taxes and raising public funds may be costly. Under a simple sufficient condition, our model predicts that the protection level increases with import penetration, both in sectors that are protected with tariffs and in sectors that are protected with quantitative restrictions.

JEL-codes: D72 F13 (search for similar items in EconPapers)
Date: 1998-08
New Economics Papers: this item is included in nep-cdm
Note: ITI
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Citations: View citations in EconPapers (2)

Published as Maggi, Giovanni and Andres Rodriguez-Clare. "Import Penetration And The Politics Of Trade Protection," Journal of International Economics, 2000, v51(2,Aug), 287-304.

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