Systematic Political Grass-Root Support for Tariffs

14 Pages Posted: 26 Jan 2003

See all articles by Wolfgang Mayer

Wolfgang Mayer

University of Cincinnati - McMicken College of Arts and Sciences - Department of Economics

Abstract

The leading political economy-of-trade models are virtually silent on two fundamental questions raised by Rodrik in 1995. Why are trade policies systematically biased against trade? And why are tariffs rather than more efficient production subsidies adopted to redistribute income? This paper shows that systematic political grass-root support for trade-restricting and inefficient tariffs emerges when the government has a revenue goal and collecting taxes is costly. Even if no tax instrument enjoys an advantage with respect to collection costs and the factor ownership distribution is unbiased, more people support tariffs than import or production subsidies. More generally, the presence of tax-collection costs creates a grass-root support bias for taxes over subsidies as instruments to redistribute income.

Suggested Citation

Mayer, Wolfgang, Systematic Political Grass-Root Support for Tariffs. Review of International Economics, Vol. 10, pp. 657-670, 2002. Available at SSRN: https://ssrn.com/abstract=343181

Wolfgang Mayer (Contact Author)

University of Cincinnati - McMicken College of Arts and Sciences - Department of Economics ( email )

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