Abstract
This paper incorporates the foreign interest in the determination of a country’s international trade policy into a model of political competition between candidates contesting elective office. We envisage foreign and domestic producer interests as expressing political support for a candidate via campaign contributions, and candidates as making trade policy pronouncements to maximize political support from producer interests. Tariffs are divisive, but VERs are consistent with conciliatory policy positions yielding mutual gain to foreign and domestic interests. No candidate has an interest in formulating a trade policy position using a tariff if a VER is a policy option.
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Hillman, A.L., Ursprung, H.W. (2008). Domestic Politics, Foreign Interests, and International Trade Policy. In: Congleton, R.D., Konrad, K.A., Hillman, A.L. (eds) 40 Years of Research on Rent Seeking 2. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-79247-5_6
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DOI: https://doi.org/10.1007/978-3-540-79247-5_6
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