Political-Economy Arguments for a Uniform Tariff

31 Pages Posted: 25 Jun 2004 Last revised: 15 Jul 2010

See all articles by Arvind Panagariya

Arvind Panagariya

University of Maryland - Department of Economics; Columbia University

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: March 1991

Abstract

Uniform tariffs have become increasingly popular in recent years, yet their economic rationale is not strong. We identify and evaluate three sets of reasons as to why governments may prefer tariff uniformity as a means of alleviating political motives for excessive protection. First, a free-rider effect may be conducive to less lobbying under a uniform tariff regime than under a regime in which tariffs are allowed to differ. Second, an input-price effect may dampen the enthusiasm of final-goods producers for import protection. Third, a precommitment effect may increase the cost to a future government of protecting favored sectors. None of these arguments provides an unambiguous, airtight case for tariff uniformity. The decision on uniformity has to be made on a case-by-case basis.

Suggested Citation

Panagariya, Arvind and Rodrik, Dani, Political-Economy Arguments for a Uniform Tariff (March 1991). NBER Working Paper No. w3661. Available at SSRN: https://ssrn.com/abstract=307118

Arvind Panagariya

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3546 (Phone)
301-405 7835 (Fax)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Dani Rodrik (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-9454 (Phone)
617-496-5747 (Fax)

HOME PAGE: http://www.ksg.harvard.edu/rodrik/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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