Inequality and Endogenous Trade Policy Outcomes
Nuno Limão and Arvind Panagariya
,
2
(
72
)
Journal of International Economics
292-309
July
2007
Abstract
An enduring puzzle in international economics is why trade interventions are biased in favor of import-competing rather than export sectors and therefore restrict trade. In this paper, we show that if the government's objective reflects a concern for inequality then trade policy generally exhibits an anti-trade bias. Importantly, under neutral assumptions, the mechanism that we analyze generates the anti-trade bias independently of whether factors are specific or mobile across sectors.