Why Legislators are such Protectionists: the Role of Majoritarian Voting in Setting Tariffs

Based on the observation that industries are often geographically concentrated, this paper proposes a new political economy model of trade. We associate the sectors of a specific factors model with electoral districts populated by continua of heterogeneous voters who differ in their relative factor endowments. We show how strategic delegation leads each district to elect a representative who is more protectionist than her median voter. The government formed by a randomly selected subset of representatives sets tariffs that are on average strictly positive. Introducing additional policy instruments reveals a trade-off between efficiency and regional targetability. This paper was inspired by a talk Roberto Perotti gave at Kiel. It was written while the author was visiting the Department of Economics at Stanford University whom I thank for its hospitality. I’m grateful to Giovanni Facchini, Peter Neary, Horst Raff, and Daniel Sturm for helpful comments and discussions. The usual caveat applies: all errors are mine.