Trade Policy Formation when Geography Matters for Specialisation
(2005) In UCD Centre for Economic Research Working Paper Series, 05/19.- Abstract
- In this paper, trade policy formation is incorporated into an
economic geography model. The political setup used is a modified version of that introduced by Grossman and Helpman (1994)
in which policy makers may be in‡uenced by lobbying contributions. On the basis of the underlying trade framework, lobbying
activity is performed in benefit of capital interests. Optimal policy outcomes indicate that the largest countries and countries
that are disadvantaged by trade regulation favour trade liberalisation. Moreover, the optimal domestic policy is more open to
trade when the local and global competition facing domestic firms
is less fierce, the welfare dependency on manufacturing... (More) - In this paper, trade policy formation is incorporated into an
economic geography model. The political setup used is a modified version of that introduced by Grossman and Helpman (1994)
in which policy makers may be in‡uenced by lobbying contributions. On the basis of the underlying trade framework, lobbying
activity is performed in benefit of capital interests. Optimal policy outcomes indicate that the largest countries and countries
that are disadvantaged by trade regulation favour trade liberalisation. Moreover, the optimal domestic policy is more open to
trade when the local and global competition facing domestic firms
is less fierce, the welfare dependency on manufacturing imports
is larger and when there is a more intense preference for variety
in consumption. It is shown that the lobbying influence on policy is
increasing in the concentration of capital ownership in the population. It is also revealed that, in the cases when domestic special
and general interests do not coincide, lobbying activity is performed to liberalise trade. In addition, this actually implies that
the presence of lobbying influence on policy raises the long-run
national welfare. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/1763309
- author
- Thede, Susanna LU
- publishing date
- 2005
- type
- Working paper/Preprint
- publication status
- submitted
- subject
- in
- UCD Centre for Economic Research Working Paper Series, 05/19.
- language
- English
- LU publication?
- no
- id
- 43554f0a-ed43-45f5-bd5c-4a16bd14145d (old id 1763309)
- date added to LUP
- 2016-04-04 14:18:34
- date last changed
- 2018-11-21 21:19:33
@misc{43554f0a-ed43-45f5-bd5c-4a16bd14145d,
abstract = {{In this paper, trade policy formation is incorporated into an<br/><br>
economic geography model. The political setup used is a modified version of that introduced by Grossman and Helpman (1994)<br/><br>
in which policy makers may be in‡uenced by lobbying contributions. On the basis of the underlying trade framework, lobbying<br/><br>
activity is performed in benefit of capital interests. Optimal policy outcomes indicate that the largest countries and countries<br/><br>
that are disadvantaged by trade regulation favour trade liberalisation. Moreover, the optimal domestic policy is more open to<br/><br>
trade when the local and global competition facing domestic firms<br/><br>
is less fierce, the welfare dependency on manufacturing imports<br/><br>
is larger and when there is a more intense preference for variety<br/><br>
in consumption. It is shown that the lobbying influence on policy is<br/><br>
increasing in the concentration of capital ownership in the population. It is also revealed that, in the cases when domestic special<br/><br>
and general interests do not coincide, lobbying activity is performed to liberalise trade. In addition, this actually implies that<br/><br>
the presence of lobbying influence on policy raises the long-run<br/><br>
national welfare.}},
author = {{Thede, Susanna}},
language = {{eng}},
note = {{Working Paper}},
series = {{UCD Centre for Economic Research Working Paper Series, 05/19.}},
title = {{Trade Policy Formation when Geography Matters for Specialisation}},
url = {{https://lup.lub.lu.se/search/files/6330436/1763891}},
year = {{2005}},
}