Trade Policy Making in a Model of Legislative Bargaining

Levent Celik, Bilgehan Karabay, John McLaren

NBER Working Paper No. 17262
Issued in July 2011, Revised in August 2013
NBER Program(s):International Trade and Investment, Political Economy

In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which is concentrated in one or more electoral districts. Each district is represented by a legislator in the Congress. Legislative process is modeled as a multilateral sequential bargaining game à la Baron and Ferejohn (1989). Some surprising results emerge: bargaining can be welfare-worsening for all participants; legislators may vote for bills that make their constituents worse off; identical industries will receive very different levels of tariff. The results pose a challenge to empirical work, since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations - some of them random realizations of mixed bargaining strategies.

download in pdf format
   (555 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17262

Published: 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. citation courtesy of

Users who downloaded this paper also downloaded* these:
Celik, Karabay, and McLaren w17810 When is it Optimal to Delegate: The Theory of Fast-track Authority
Krishna, Poole, and Senses w17256 Wage Effects of Trade Reform with Endogenous Worker Mobility
Krishna and Sethupathy w17257 Trade and Inequality in India
Marimon and Zilibotti w6038 Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits
Bloom, Draca, and Van Reenen w16717 Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us