A Political-Economy Theory of Trade Agreements

Rodríguez-Clare, Andres and Giovanni Maggi
Authors registered in the RePEc Author Service: Andres Rodriguez-Clare

No 5321, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a model where trade agreements - in addition to correcting terms-of-trade externalities - help governments to commit vis-a-vis domestic industrial lobbies. We explore how trade liberalization is affected by the characteristics of the political environment, such as the degree to which governments are politically motivated and the influence of lobbies during the negotiation of the agreement. We find that governments may prefer to commit to tariff ceilings, rather than exact tariff levels. We also find that trade liberalization is deeper when capital is more mobile across sectors. In a dynamic extension of the model, the optimal agreement entails an immediate slashing of tariffs followed by a phase of gradual trade liberalization. In the gradual phase, the speed of liberalization is higher when capital is more mobile.

Keywords: Trade agreements; Lobbying; Domestic commitment (search for similar items in EconPapers)
JEL-codes: D72 F13 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-int and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://cepr.org/publications/DP5321 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: A Political-Economy Theory of Trade Agreements (2007)
Working Paper: A Political-Economy Theory of Trade Agreements (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5321

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5321

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().