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Working Paper

Protectionist Demands in Globalization

We analyze a small open economy. The citizens have single-peaked preferences on the tariff rate for an import good. They declare a publicly most preferred tariff rate to the government which has discretion in the choice of the implemented tariff rate. While the government has incentive not to deviate too much from the publicly chosen tariff rate, its final choice is determined by bargaining with a foreign lobby who has a much lower optimal tariff rate and offers monetary transfers to the government in return for lowered tariffs. We show that the expectation of such a foreign influence affects the citizens’ voting behavior. Namely, they tend to vote for a more protectionist tariff policy. Moreover, this behavior leads to an increase in transfers by the foreign lobby.

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.


Suggested Citation

Ilhan, Arzu, and Özgür Kibris. 2000. “Protectionist Demands in Globalization.” Federal Reserve Bank of Cleveland, Working Paper No. 00-06. https://doi.org/10.26509/frbc-wp-200006