Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach

58 Pages Posted: 19 Apr 2003

See all articles by Pravin Krishna

Pravin Krishna

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Devashish Mitra

Syracuse University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: April 2003

Abstract

Using the menu-auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous, this paper analyzes the impact of unilateral trade liberalization by one country on its partner's trade policies. We find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country. Intuitively, unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import-competing lobby there for lower protection.

Suggested Citation

Krishna, Pravin and Mitra, Devashish, Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach (April 2003). NBER Working Paper No. w9631. Available at SSRN: https://ssrn.com/abstract=396691

Pravin Krishna (Contact Author)

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

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Brown University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Devashish Mitra

Syracuse University - Department of Economics ( email )

The Maxwell School of Citizenship & Public Affairs
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Syracuse, NY 13244-1020
United States

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Germany

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