Title
Policy choice: Theory and evidence from commitment via international trade agreements
Date Issued
01 January 2018
Access level
open access
Resource Type
book part
Author(s)
Brandeis University
Publisher(s)
World Scientific Publishing Co.
Abstract
Why do governments employ inefficient policies when more efficient ones are available for the same purpose? We address this puzzle in the context of redistribution toward special interest groups (SIGs) by focusing on a set of important policies: tariffs and non-tariff barriers (NTBs). In our policy choice model a government can gain by committing to constrain tariffs through international agreements even if this leads to the use of less efficient NTBs; commitment has political value because it improves the bargaining position of a government that is weak relative to domestic SIGs. Using detailed data we find support for several of the model's predictions including: (i) tariff commitments in trade agreements increase the likelihood and restrictiveness of NTBs but not enough to offset the original tariff reductions; (ii) tariff commitments are more likely to be adopted and more stringent when the government is weaker relative to a SIG. Thus, the results can explain the use of inefficient policies for redistribution and suggest that the bargaining motive is an important source of the political value of commitment in international agreements.
Start page
179
End page
198
Language
English
OCDE Knowledge area
Economía
Scopus EID
2-s2.0-85067159494
Source
Policy Externalities and International Trade Agreements
ISBN of the container
9789813147980
Sources of information: Directorio de Producción Científica Scopus