A Protectionist Bias in Majoritarian Politics, Issue 11014
Centre for Economic Policy Research, 2004 - Commercial policy - 35 pages
"We develop a novel model of campaigns, elections, and policymaking in which the ex ante objectives of national party leaders differ from the ex post objectives of elected legislators. This generates a distinction between "policy rhetoric" and "policy reality" and introduces an important role for "party discipline" in the policymaking process. We identify a protectionist bias in majoritarian politics. When trade policy is chosen by the majority delegation and legislators in the minority have limited means to influence choices, the parties announce trade policies that favor specific factors, and the expected tariff or export subsidy is positive. Positions and expected outcomes monotonically approach free trade as party discipline strengthens"--National Bureau of Economic Research web site.
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assume Assumption average tariff candidate from party choose citizens constituents convexity deadweight loss deviating discipline is less distribution Economics elected legislators elected representatives electoral outcome Elhanan Helpman equations 11 equilibrium platform ex post expected tariff expected utility export subsidy Finance finite first-order condition free trade Grossman implies industry g Instructions Inside legislature less than perfect Luigi Zingales Majoritarian Politics majoritarian systems majority party marginal McGillivray monotonically Nash equilibrium national party NBER Working Papers negative non-negative Number output responds positively parameter values parties announce party discipline party leaders party's penalties Philippe Aghion policy choices policymaking process political parties popularity shocks positive protection positive tariff positively to price profit function proportional representation protectionist bias rate of protection representative of district residents of districts second-order conditions sets the trade Subscription subsidy or export symmetric equilibrium tariff or export three districts trade policy vector voter's assessment voters votes wins in district