Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2003-10
Based on the observation that industries are often geographically concentrated, this paper proposes a new political economy model of trade protection. We associate the sectors of a specific factors model with electoral districts populated by continua of heterogeneous voters who differ in their relative factor endowments. We show how strategic delegation leads each district to elect a representative who is more protectionist than the median voter. The legislature formed by these representatives then sets tariffs that are strictly positive. Introducing additional policy instruments reveals a trade-off between efficiency and regional targetability.
trade policy political economy representative democracy