Trade Policy Making in a Model of Legislative Bargaining / Levent Celik, Bilgehan Karabay, John McLaren.

Format:

Book

Author/Creator:

Celik, Levent.

Contributor:

National Bureau of Economic Research.

Karabay, Bilgehan.

McLaren, John.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17262.

NBER working paper series no. w17262

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic 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 Congress. Legislative process is modeled as a multilateral sequential bargaining game à la Baron and Ferejohn (1989). Some surprising results emerge: bargaining can be welfare-worsening for all participants; legislators may vote for bills that make their constituents worse off; identical industries will receive very different levels of tariff. The results pose a challenge to empirical work, since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations - some of them random realizations of mixed bargaining strategies.

Notes:

Print version record

July 2011.