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Title: Trade Wars and Trade Talks

Author(s): Gene M. Grossman and Elhanan Helpman

Publication Date: May 1993

Keyword(s): Political Economy, Tariff Wars, Trade Negotiations and Trade Policy

Programme Area(s): International Trade and Regional Economics

Abstract: Whether governments clash in trade disputes or negotiate over trade agreements, their actions in the international arena reflect political conditions back home. Previous studies of cooperative and non-cooperative trade relations have focused on governments that are immune from political pressures and act as benevolent servants of the public interest. Here we take a first step towards introducing domestic politics into the analysis of international economic relations. We study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups. The analysis reveals the determinants of the structure of protection in a non-cooperative trade war and in a cooperative trade agreement.

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Bibliographic Reference

Grossman, G and Helpman, E. 1993. 'Trade Wars and Trade Talks'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=806