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Institutional Structure In The Political Economy Of Protection: Legislated V. Administered Protection

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  • H. Keith Hall
  • Douglas Nelson

Abstract

In endogenous tariff theory the outcome of the political process (the tariff) is a strictly private good from the perspective of the specific‐factors in an industry. That is, the benefits from participation in the political process are fully captured by the participant group. We argue that this is an institutional assumption by showing that an alternative, administered protection, involves the enforcement of a rule that, once written, is applied to all industry groups, where applicable. Attempts to increase protection therefore result in benefits to all import competing industry groups. In a short‐run neo‐classical model of trade with no intermediate goods, you therefore get a political free rider problem that you do not get with legislated tariffs. Further, it is argued that the distinction between these forms of protection is of both empirical and philosophical relevance.

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  • H. Keith Hall & Douglas Nelson, 1992. "Institutional Structure In The Political Economy Of Protection: Legislated V. Administered Protection," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 61-77, March.
    • Handle: RePEc:bla:ecopol:v:4:y:1992:i:1:p:61-77
    DOI: 10.1111/j.1468-0343.1992.tb00055.x
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    References listed on IDEAS

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    1. Robert C. Feenstra & Jagdish N. Bhagwati, 1982. "Tariff Seeking and the Efficient Tariff," NBER Chapters, in: Import Competition and Response, pages 245-262, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Hom M Pant, 1996. "Endogenous Behaviour of the Tariff Rate in a Political Economy," International Trade 9609001, University Library of Munich, Germany, revised 01 Oct 1996.
    2. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
    3. Rodrik, Dani, 1994. "What does the Political Economy Literature on Trade Policy (Not) Tell Us That We Ought to Know?," CEPR Discussion Papers 1039, C.E.P.R. Discussion Papers.

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