Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2010:8: Comparative Trade Policy

Magnus Wiberg ()
Additional contact information
Magnus Wiberg: Ministry of finance, Postal: Swedish Government Offices, SE-103 33 Stockholm, Sweden

Abstract: Current research has found ambiguous results with respect to the effects of the type of electoral regime on trade policy. The present paper proposes a solution to this indeterminacy. It is shown that the equilibrium level of trade protection can be relatively higher, as well as lower, under a majoritarian electoral rule compared to proportional representation. The equilibrium outcome is shown to depend on the number of voters in swing districts who own a factor specific to the exporting industry in relation to those who possess claims to the specific input employed by the import-competing sector. It is further argued that political rents are lower (higher) under majoritarian elections if there are more factor owners in the swing districts with stakes in the exporting (import-competing) industry.

Keywords: Endogenous Tariff Formation; Trade Policy; Electoral Rules

JEL-codes: D72; F13

27 pages, May 27, 2010

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