Monday, January 7, 2019

There may be a variety of reasons why more democratic states are engaged in higher levels of international trade; a larger concern for consumer interests, however, is likely not among them

The Absence of Consumer Interests in Trade Policy. Timm Betz and Amy Pond. The Journal of Politics, https://www.journals.uchicago.edu/doi/abs/10.1086/701493

Abstract: Why are some countries more open to trade than others? Prominent explanations emphasize differences in the influence of voters as consumers. Consumers benefit from lower prices. Because governments in democracies are more responsive to voters, they should implement lower tariffs. We develop and evaluate an implication of this line of argument. If lower tariffs are a response to consumer interests, lower tariffs should be concentrated on products most relevant to consumers. Using data on consumption shares across product categories, we report evidence that consumer interests do not account for lower tariffs. Governments place higher tariffs on goods with higher consumption shares, and we find no evidence that this relationship attenuates under more democratic institutions. There may be a variety of reasons why more democratic states are engaged in higher levels of international trade. A larger concern for consumer interests, however, is likely not among them.

Keywords: trade, consumers, democracy, tariffs, contract enforcement