NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach

Pravin Krishna, Devashish Mitra

NBER Working Paper No. 9631
Issued in April 2003
NBER Program(s):   ITI

Using the menu-auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous, this paper analyzes the impact of unilateral trade liberalization by one country on its partner's trade policies. We find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country. Intuitively, unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import-competing lobby there for lower protection.

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Document Object Identifier (DOI): 10.3386/w9631

Published: Krishna, Pravin and Devashish Mitra. "Reciprocated Unilateralism In Trade Policy," Journal of International Economics 65(2) 461-487, March 2005

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