Trade Politics: A Heckscher-Ohlin-Downs Framework

29 Pages Posted: 6 Jun 2006

See all articles by Miaojie Yu

Miaojie Yu

Peking University - China Center for Economic Research (CCER)

Date Written: April 2006

Abstract

In this study, we show that the unique Nash equilibrium of a political competition model between two parties in a Heckscher-Ohlin setting entails differentiated trade politics, with one party proposing a high tariff, and the other, a low one. The basic departure from a median voter model is the introduction of campaign contributions which influence the vote of a group of uninformed voters. Parties are Downsian, not ideological, yet campaign contributions create an asymmetry between them. Thus, the heterogeneous trade platforms in a two-party system are endogenous. One party is labeled as a promoter of protectionism, whereas the other is labeled as pro-trade.

Keywords: Tariffs, Political Competition, Campaign Contribution, Median Voter

JEL Classification: F13, P16

Suggested Citation

Yu, Miaojie, Trade Politics: A Heckscher-Ohlin-Downs Framework (April 2006). Available at SSRN: https://ssrn.com/abstract=906281 or http://dx.doi.org/10.2139/ssrn.906281

Miaojie Yu (Contact Author)

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, Beijing 100871
China
+86-10-6275-3109 (Phone)

HOME PAGE: http://mjyu.ccer.edu.cn

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