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When Is It Optimal to Delegate: The Theory of Fast-Track Authority

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  • Levent Celik
  • Bilgehan Karabay
  • John McLaren

Abstract

With fast-track authority (FTA), the US Congress delegates trade policy authority to the president by committing not to amend a trade agreement. Why would it cede such power? We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. In our model: (i) FTA is never granted if an industry operates in the majority of districts; (ii) The more symmetric the industrial pattern, the more likely is FTA, since competition for protectionist rents is most punishing when bargaining power is symmetrically distributed; (iii) Widely disparate initial tariffs prevent free trade even with FTA. (JEL C78, D72, F13, F14)

Suggested Citation

  • Levent Celik & Bilgehan Karabay & John McLaren, 2015. "When Is It Optimal to Delegate: The Theory of Fast-Track Authority," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 347-389, August.
    • Handle: RePEc:aea:aejmic:v:7:y:2015:i:3:p:347-89
    Note: DOI: 10.1257/mic.20140031
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    Cited by:

    1. T. Renee Bowen, 2015. "Legislated Protection And The World Trade Organization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(4), pages 1349-1384, November.
    2. Levent Celik & Bilgehan Karabay, 2011. "A Note on Equilibrium Uniqueness in the Baron-Ferejohn Model," CERGE-EI Working Papers wp440, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Levent Celik & Bilgehan Karabay, 2016. "Veto players and equilibrium uniqueness in the Baron–Ferejohn model," Theory and Decision, Springer, vol. 81(1), pages 33-52, June.
    4. Gleason Judd & Lawrence S. Rothenberg, 2020. "Flexibility or Stability? Analyzing Proposals to Reform the Separation of Powers," American Journal of Political Science, John Wiley & Sons, vol. 64(2), pages 309-324, April.
    5. Celik, Levent & Karabay, Bilgehan & McLaren, John, 2013. "Trade policy-making in a model of legislative bargaining," Journal of International Economics, Elsevier, vol. 91(2), pages 179-190.
    6. Celik, Levent & Karabay, Bilgehan & McLaren, John, 2020. "Fast-track authority: A hold-up interpretation," Journal of International Economics, Elsevier, vol. 127(C).
    7. Che, Yi & Xiao, Rui, 2020. "Import competition, fast-track authority and U.S. policy toward China," Journal of Comparative Economics, Elsevier, vol. 48(4), pages 974-996.
    8. Xiangjun Ma & John McLaren, 2018. "A Swing-State Theorem, with Evidence," NBER Working Papers 24425, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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