Reconciling observed tariffs and the median voter model

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Median voter theory applied to trade policy predicts positive tariffs in capital-abundant countries and negative tariffs in labor-abundant countries. Negative tariffs are rare, and this paper reconciles the median voter theory with observed protectionism across countries. By considering large countries, I show the optimal tariff is a sum of the median voter component and a positive term of trade component. Positive terms of trade effects raise tariffs in all countries, and can overcome the negative median voter component in labor-abundant countries. Testing the tariff prediction with cross-section and panel data from the 1990s, I show the median voter component is negative in labor-abundant countries and positive in capital-abundant countries. As expected, terms of trade effects raise tariffs across all countries and are stronger among nonmembers of the WTO.

JEL-codes: J1 (search for similar items in EconPapers)
Date: 2014-08-08
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Citations: View citations in EconPapers (9)

Published in Economics and Politics, 8, August, 2014, 26(3), pp. 483-504. ISSN: 0954-1985

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http://eprints.lse.ac.uk/59227/ Open access version. (application/pdf)

Related works:
Journal Article: Reconciling Observed Tariffs and the Median Voter Model (2014)
Working Paper: Reconciling Observed Tariffs and the Median Voter Model (2014)
Working Paper: Reconciling observed tariffs and the median voter model (2014)
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