Economies of scale, Ideology, Inequality, Trade policy, Welfare, F12, F13, D30, D72, P16,

This paper analyses trade policy within a modified version of the well-known political economy models of Hillman (1989) and Long & Vousden (1991). The modified model incorporates economies of scale in production and cast doubts on viewing trade policy as solely determined by political ideology and re-election motives. Cross-country analyses confirm our predictions and establish that strategic economic as well as political concerns are dominant in trade policy.Economies of scale, ideology, trade policy, protection, welfare,

Does more wealth inequality lead to more inequitable trade policies? To answer this question, this study develops a political economy model of international trade theory and predicts that in a pro-worker regime, an increase in wealth inequality leads to more equitable trade policies. In a pro-capitalist regime, an increase in wealth inequality leads to more inequitable trade policies. Using cross-country data on political ideology, wealth inequality and different measures of trade policies, this paper finds empirical support for these predictions.

No abstract