Ira Gang
Rutgers University
Department of Economics
E-mail: gang@economics.rutgers.edu

Item Number:  [J31]
Title: Revenue Motives and Trade Liberalization (with David Feldman), Review of International Economics, 4 (1996) 276-281
Abstract: Governments in more developed economies partially compensate import-competing industries when world prices fall, i.e. they lean against the wind.  In less developed economies we often observe liberalization in response to the same shock.  We use a political-support maximization model with revenue motives to derive conditions under which a rational policy-maker would respond to lower world prices by reducing tariff protection for an import-competing industry.  An initial tariff that exceeds the maximum revenue level proves necessary but not sufficient for politically optimal liberalization following a fall in the world price of the importable good.

Reference:  David Feldman and Ira N. Gang, Revenue Motives and Trade Liberalization, Review of International Economics, 4 (1996) 276-281

Co-Author Information:
David Feldman
College of William and Mary
Rutgers University
E-Mail:  

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