Systematic Political Grass-Root Support for Tariffs

Topics:
Import Export,
Tariffs,
Taxes
Tags:
Blackwell Publishing,
Finance,
Financial Planning,
Free Trade,
Tariff,
Taxes
Source:
Blackwell Publishing

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Overview: 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.

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Format: PDF | Size: 101KB | Date: Oct 2002 | Pages: 15

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