Political support for trade policy in the European Union |
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| Institution: | 1. University of Bern, Department of Economics, World Trade Institute, Hallerstrasse 6, 3012 Bern, Switzerland;2. Murphy Institute of Political Economy, Tulane University, New Orleans, LA 70118, USA;1. Department of Economics, Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Malaysia;2. Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, Malaysia;1. Max Planck Institute of Economics, Kahlaische Str. 10, 07745 Jena, Germany;2. DSE, University of Verona, Via dell''Artigliere 19, Verona, Italy;3. Department of Economics, Lund University, P.O. Box 7082, 220 07 Lund, Sweden;1. Lund University, Department of Economics, Box 7082, SE-22007 Lund, Sweden;2. Aarhus University, Department of Economics and Business, Fuglesangs Allé 4, DK-8210 Aarhus V, Denmark |
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| Abstract: | We adopt the Stigler–Peltzman model of policy-making as developed by Hillman for application to the politics of international trade, in which the government is represented by a political support function trading-off the industry rents stemming from protection against the losses accruing to the general population. As a starting point, we examine the economic impact of actual government action as revealed by the structure of protection, backing out the weights implied by the marginal welfare effects of the set of EU import tariffs across sectors. We build on Tyers' application of methods to international trade employing a numerical general equilibrium model of the EU. This captures direct marginal effects of sector-level protection on protected industries, indirect effects on upstream and downstream industries, and the effect on overall welfare. We then deconstruct the revealed weighting pattern along the lines of industry nationality and related industry characteristics. |
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