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A simple model of the juggernaut effect of trade liberalisation

Baldwin, Richard E. and Robert-Nicoud, Frédéric (2008) A simple model of the juggernaut effect of trade liberalisation. CEPDP, 845. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282204

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Identification Number: 845

Abstract

This paper posits a formal political economy model where the principle of reciprocity in multilateral trade talks results in the gradual elimination of tariffs. Reciprocity trade talks turn each nation’s exporters into anti-protectionists at home; they lower foreign tariffs by convincing their own government to lower home tariffs. Due to the new array of political forces, each government finds it politically optimal to remove tariffs that it previously found politically optimal to impose. The one-off global tariff cut then reshapes the political economy landscape via entry and exit – reducing the size/influence of import-competing sectors and increasing that of exporters. In the next round of trade talks governments therefore find it politically optimal to cut tariffs again. The process may continue until tariffs are eliminated.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2008 the authors
Subjects: H Social Sciences > HF Commerce
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Geography and Environment
Date Deposited: 18 Jul 2008 11:42
Last Modified: 01 Oct 2010 09:12
URI: http://eprints.lse.ac.uk/id/eprint/19645

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