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Contesting an International Trade Agreement

Author

Listed:
  • Matthew T. Cole

    (Department of Economics, California Polytechnic State University)

  • James Lake

    (Department of Economics, Southern Methodist University)

  • Ben Zissimos

    (Department of Economics, University of Exeter)

Abstract
After governments sign an international trade agreement (TA), each government must ratify the TA. Often, this ratification process is lengthy and the outcome highly uncertain. We model a two-country TA where, unlike prior literature, pro-trade and anti-trade interest groups in each country recognize that (i) TA implementation requires ratification by both governments and (ii) they cannot condition contributions on their government's ratification decision. In this new class of contests, which we call 'parallel contests', we show that (i) anti- and pro-trade lobbies lobby in equilibrium, (ii) the probability of TA ratification lends itself to intuitive and tractable comparative statics, and (iii) the protection embodied in negotiated TA tariffs reflects a tension between the liberalizing force of lobbying and inherently protectionist government preferences.

Suggested Citation

  • Matthew T. Cole & James Lake & Ben Zissimos, 2017. "Contesting an International Trade Agreement," Working Papers 1703, California Polytechnic State University, Department of Economics.
    • Handle: RePEc:cpl:wpaper:1703
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    Cited by:

    1. Veselov, Dmitry & Yarkin, Alexander, 2024. "Lobbying for Industrialization: Theory and Evidence," IZA Discussion Papers 17045, Institute of Labor Economics (IZA).
    2. Michael Blanga-Gubbay & Paola Conconi & Mathieu Parenti, 2020. "Globalization for Sale," CESifo Working Paper Series 8239, CESifo.
    3. Cole, Matthew T. & Lake, James & Zissimos, Ben, 2021. "Contesting an international trade agreement," Journal of International Economics, Elsevier, vol. 128(C).
    4. Lake, James & Nie, Jun, 2023. "The 2020 US Presidential election and Trump’s wars on trade and health insurance," European Journal of Political Economy, Elsevier, vol. 78(C).
    5. Yuting Gao, 2022. "Lobbying for Trade Liberalization and its Policy Influence," CAEPR Working Papers 2022-006 Classification-D, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    6. Appelbaum, Elie & Melatos, Mark, 2024. "Preferential trade agreements as insurance," Journal of International Money and Finance, Elsevier, vol. 148(C).
    7. James Lake & Jun Nie, 2022. "The 2020 US Presidential Election and Trump's Trade War," CESifo Working Paper Series 9669, CESifo.
    8. Rabah Amir & Hend Ghazzai & Rim Lahmandi-Ayed, 2023. "On the political economy of economic integration," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 61(1), pages 61-100, July.

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    More about this item

    Keywords

    Contests; Trade Agreements; Lobbying;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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