Commercial Policy with Altruistic Voters

Julio J. Rotemberg

NBER Working Paper No. 7984
Issued in October 2000
NBER Program(s):International Trade and Investment

This paper considers a specific factor model with two sectors in which agents are altruistic towards domestic residents. I show that, even if the degree of altruism is small, direct democracy leads to commercial policies that are biased against trade as long as the mobile factor is unbiased in the sense of Jones and Ruffin (1977) and the income of the owners of the factor which is specific to the import competing sector is lower than the income of the owners of the other specific factor. Tariffs may be preferred to subsidies by the median voter if subsidies require that beneficiaries spend a fixed cost to demonstrate that they are entitled to these subsidies and there is heterogeneity in the size of producers. Lastly, I construct a model of indirect democracy where legislators can receive campaign contributions from potential lobbyists. Even if campaign contributions are positive in equilibrium, the tariffs that emerge from votes taken after lobbying can represent the wishes of the median voter. In this model, campaign contributions do not buy votes. Instead, consistent with what is claimed in the qualitative literature, they buy access to legislators' time. The model is also consistent with the evidence showing that campaign contributions and lobbying activity are directed mainly at legislators who already agree with their contributors and their lobbyists.

download in pdf format
   (285 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7984

Published: Rotemberg, Julio J. "Commercial Policy With Altruistic Voters," Journal of Political Economy, 2003, v111(1,Feb), 174-201. citation courtesy of

Users who downloaded this paper also downloaded* these:
Obstfeld and Rogoff w6694 Risk and Exchange Rates
O'Rourke w9872 Heckscher-Ohlin Theory and Individual Attitudes Towards Globalization
Grossman and Helpman w4149 Protection For Sale
Krishna w3244 Export Restraints With Imperfect Competition: A Selective Survey
NBER Videos

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

Contact Us