NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade Wars and Trade Talks

Gene M. Grossman, Elhanan Helpman

NBER Working Paper No. 4280
Issued in February 1993
NBER Program(s):   ITI

Whether governments clash in trade disputes or negotiate over trade agreements, their actions in the international arena reflect political conditions back home. Previous studies of cooperative and noncooperative trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest. Here we take a first step toward introducing domestic politics into the analysis of international economic relations. We study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups. The analysis reveals the determinants of the structure of protection in a noncooperative trade war and in a cooperative trade agreement.

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Document Object Identifier (DOI): 10.3386/w4280

Published: Journal of Political Economy, vol. 103, 1995, pp. 675-708

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