Positive Feedback: The Impact of Trade Liberalization on Industry Demands for Protection

38 Pages Posted: 9 May 2008  

Oona A. Hathaway

Yale University - Law School


This article proposes a theory of dynamic industry preferences and strategies to explain variation in industries' demand for trade protection over time. This theory shows how the characteristics of industries affect their demand for trade policy and how, in turn, trade policy transforms industry characteristics. An important implication of this theory is that trade liberalization tends to reduce, rather than increase, industry demand for protection over the long term. The article begins by developing a static model of industry decision making that illustrates how producers faced with a reduction in trade barriers weigh the costs and benefits of political action and economic adjustment. It then explains how the strategic choices of an industry are determined by key industry characteristics that evolve over time in response to changes in trade policy and market conditions. In particular, it demonstrates that reductions in trade barriers may have a positive feedback effect that dampens rather than amplifies domestic protectionist sentiment. To test this model, the article examines the dramatic postwar transformation of three industries that have historically demanded and received extensive import protection: the footwear, textile, and apparel industries. The article concludes with an assessment of the model and a discussion of its possible implications for our understanding of the politics of trade policy.

Keywords: trade, international law, trade law, footwear, apparel, textiles, positive feedback

JEL Classification: K33, F10

Suggested Citation

Hathaway, Oona A., Positive Feedback: The Impact of Trade Liberalization on Industry Demands for Protection. International Organization, Vol. 52, No. 3, 1998. Available at SSRN: https://ssrn.com/abstract=1131411

Oona A. Hathaway (Contact Author)

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-4992 (Phone)
203-432-1107 (Fax)

Register to save articles to
your library


Paper statistics

Abstract Views