Can compensation save free trade?

• 成果类型: Article
• 署名作者: Davidson, Carl; Matusz, Steven J.; Nelson, Douglas R.
• 署名单位: Michigan State University; University of Nottingham; Tulane University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2006.05.001
• 发表日期: 2007
• 页码: 167-186
• 关键词: liberalization; median voter; COMPENSATION

摘要

When the median voter loses from trade reform, liberalization is blocked. Allowing the electorate to vote for compensatory subsidies may reverse this outcome. However, the order of the agenda may matter. The winners who pay the compensation may be sufficiently powerful to block compensation if trade is first liberalized. Seeing the inevitable outcome of sequential votes, the median voter realizes he will not be compensated for his losses and opposes liberalization. In contrast, liberalization can be achieved if compensation is placed first on the agenda. Finally, there is a significant chance that the least efficient compensation scheme will be chosen. (c) 2006 Elsevier B.V. All rights reserved.