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This paper presents a theory of trade agreements where "politics" play an central role. This stands in contrast with … the standard theory, where even politically-motivated governments sign trade agreements only to deal with terms …
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We develop a model in which special interest groups make political contributions in order to influence an incumbent government's choice of trade policy. In the political equilibrium. the interest groups bid for protection, and each group's offer is optimal given the offers of the others. The...
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