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Protectionist Response to Import Competition in Declining Industries Reconsidered

Jay Pil Choi

Title:
Protectionist Response to Import Competition in Declining Industries Reconsidered
Author(s):
Choi, Jay Pil
Date:
Type:
Working papers
Department:
Economics
Persistent URL:
Series:
Department of Economics Discussion Papers
Part Number:
9596-01
Publisher:
Department of Economics, Columbia University
Publisher Location:
New York
Abstract:
"In a seminal article on the political economy of trade protection, Hillman (1982) proposed a theory of endogeneous protection in which the level of protection provided to an import-competing industry is determined as an outcome of political competition by agents in the economy. Hillman adapts the regulation model of Stigler-Peltzman to this international setting in which the government is viewed as a less benign, political support-maximizing agent. More specifically, he uses a Ricardo-Viner type specific factors model of international trade where owners of the factor specific to the import-competing sector lobby for protection whereas owners of other factors oppose it. Adopting the StiglerPeltzman assumption employed in the context of regulation, he first specifies a political support function which depends on the welfare levels of two competing groups which, in turn, depend on the level of the regulated domestic industry price. The implication of this set-up is that the industry's domestic price is invariant to import price changes because the political support-seeking policy-maker will always ensure that the domestic price is maintained at the level where the political support function is maximized. Therefore, the import tariff will be adjusted to exactly offset any exogenous changes in the world price."
Subject(s):
Economics
Item views
1340
Metadata:
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Suggested Citation:
Jay Pil Choi, 1995, Protectionist Response to Import Competition in Declining Industries Reconsidered, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:15655.

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