Reciprocated Unilateralism in Trade Reforms with Majority Voting
NBER Working Paper No. 10826
This paper shows how unilateral liberalization in one country can increase the voting support for reciprocal reduction in trade barriers in a partner country. When trade policies are determined simultaneously in the two countries, we show the possibility of multiple political equilibria - countries may both be protectionist or trade freely with each other. Starting with trade protection in both countries, a unilateral reform in one country is thus shown to bring about a free trade equilibrium (a self-enforcing state) that is consistent with majority voting in both countries.
Published: Krishna, Pravin, and Devashish Mitra. "Reciprocated Unilateralism in Trade Reforms with Majority Voting." Journal of Development Economics 85(1-2): 81-93, February 2008