Reciprocated unilateralism in trade policy

Pravin Krishna, Devashish Mitra

Research output: Contribution to journalArticle

19 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)461-487
Number of pages27
JournalJournal of International Economics
Volume65
Issue number2
DOIs
StatePublished - Mar 1 2005

Keywords

  • GATT
  • Lobby formation
  • Political economy
  • Reciprocity
  • Trade policy
  • Unilateralism

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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