Protectionist demands in globalization

Kıbrıs, Arzu and Kıbrıs, Özgür and Gürdal, Mehmet Yiğit (2022) Protectionist demands in globalization. Review of Economic Design (SI), 26 (3). pp. 345-365. ISSN 1434-4742 (Print) 1434-4750 (Online)

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We construct a game theoretic model that offers to explain the increase in trade protectionism as a rational reaction of the voters to their increased concern that the policy choices of their governments are being influenced by international actors. More specifically, we construct a small open economy in which the citizens declare their most preferred tariff rate on an import good to their government. While the government has incentive not to deviate too much from the publicly demanded tariff rate, its final decision is determined after bargaining with a foreign lobby which offers benefits to the government in return of lowered tariffs. We show that the expectation of such foreign influence affects the citizens’ voting behavior. Namely, they tend to vote for more protectionist policies. Moreover, this behavior leads to an increase in benefits by the foreign lobby to the government.
Item Type: Article
Uncontrolled Keywords: Bargaining; Bayesian game; Manipulation; Open economy; Tariffs; Voting
Divisions: Faculty of Arts and Social Sciences
Depositing User: Özgür Kıbrıs
Date Deposited: 27 Aug 2022 13:07
Last Modified: 27 Aug 2022 13:07

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