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16:30 | Micro Theory Research Seminar
Trade Policy-Making in a Model of Legislative Bargaining
Authors: Levent Celik, Bilgehan Karabay, and John McLaren
Abstract: In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which is concentrated in one or more electoral districts. Each district is represented by a legislator in the legislature. The legislative process is modeled as a multilateral sequential bargaining game á la Baron and Ferejohn (1989). Our results indicate that expected welfare gains (or losses) accruing to each industry as a result of legislative bargaining depend on three key factors: (i) industry dispersion, (ii) the status quo tariff/subsidy each industry faces, and (iii) aggregate output of each industry. As a result, our model not only integrates the findings of the existing literature but also goes beyond that by analyzing the effects of legislative bargaining and status quo on trade policy formation.
Full Text WILL BE AVAILABLE in the CERGE-EI LIBRARY (as of March 18) and IN ROOM # 6 BEFORE THE SEMINAR
