Protectionist demands in globalization

We construct a game theoretic model that offers to explain the increase in trade protectionism as a rational reaction of the voters to their increased concern that the policy choices of their governments are being influenced by international actors. More specifically, we construct a small open econo...

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Bibliographic Details
Published in:Review of economic design 2022-09, Vol.26 (3), p.345-365
Main Authors: Kıbrıs, Arzu, Kıbrıs, Özgür, Gürdal, Mehmet Yiğit
Format: Article
Language:English
Subjects:
Behavioral/Experimental Economics
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
EU membership
Game Theory
Globalization
Immigration
Intergovernmental relations
International law
International organizations
Microeconomics
Nationalism
Original Paper
Political campaigns
Populism
Protectionism
Social and Behav. Sciences
Tariffs
Voter behavior
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Summary:We construct a game theoretic model that offers to explain the increase in trade protectionism as a rational reaction of the voters to their increased concern that the policy choices of their governments are being influenced by international actors. More specifically, we construct a small open economy in which the citizens declare their most preferred tariff rate on an import good to their government. While the government has incentive not to deviate too much from the publicly demanded tariff rate, its final decision is determined after bargaining with a foreign lobby which offers benefits to the government in return of lowered tariffs. We show that the expectation of such foreign influence affects the citizens’ voting behavior. Namely, they tend to vote for more protectionist policies. Moreover, this behavior leads to an increase in benefits by the foreign lobby to the government.
ISSN:1434-4742
1434-4750
DOI:10.1007/s10058-021-00275-2