Trade, Inequality, and the Political Economy of Institutions

This paper investigates the relationship between international trade and the quality of economic institutions. We model institutions as fixed costs of entry, in a framework that has two key features. First, preferences over entry costs differ across firms and depend on firm size. Larger firms prefer...

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Main Authors:	Do, Quy-Toan, Levchenko, Andrei A.
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Institutions: Design, Formation, and Operations D020 Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D720 Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Production, Pricing, and Market Structure Size Distribution of Firms L110
Online Access:	http://hdl.handle.net/10986/5668

id	okr-10986-5668
recordtype	oai_dc
spelling	okr-10986-56682021-04-23T14:02:23Z Trade, Inequality, and the Political Economy of Institutions Do, Quy-Toan Levchenko, Andrei A. Institutions: Design, Formation, and Operations D020 Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D720 Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Production, Pricing, and Market Structure Size Distribution of Firms L110 This paper investigates the relationship between international trade and the quality of economic institutions. We model institutions as fixed costs of entry, in a framework that has two key features. First, preferences over entry costs differ across firms and depend on firm size. Larger firms prefer to set higher costs of entry, in order to reduce competition. Second, these costs are endogenously determined in a political economy equilibrium. Trade opening can lead to higher entry costs when it changes the political power in favor of a small elite of large exporters, who in turn prefer to install high entry barriers. 2012-03-30T07:33:57Z 2012-03-30T07:33:57Z 2009 Journal Article Journal of Economic Theory 00220531 http://hdl.handle.net/10986/5668 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Institutions: Design, Formation, and Operations D020 Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D720 Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Production, Pricing, and Market Structure Size Distribution of Firms L110
spellingShingle	Institutions: Design, Formation, and Operations D020 Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D720 Neoclassical Models of Trade F110 Trade Policy International Trade Organizations F130 Production, Pricing, and Market Structure Size Distribution of Firms L110 Do, Quy-Toan Levchenko, Andrei A. Trade, Inequality, and the Political Economy of Institutions
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	This paper investigates the relationship between international trade and the quality of economic institutions. We model institutions as fixed costs of entry, in a framework that has two key features. First, preferences over entry costs differ across firms and depend on firm size. Larger firms prefer to set higher costs of entry, in order to reduce competition. Second, these costs are endogenously determined in a political economy equilibrium. Trade opening can lead to higher entry costs when it changes the political power in favor of a small elite of large exporters, who in turn prefer to install high entry barriers.
format	Journal Article
author	Do, Quy-Toan Levchenko, Andrei A.
author_facet	Do, Quy-Toan Levchenko, Andrei A.
author_sort	Do, Quy-Toan
title	Trade, Inequality, and the Political Economy of Institutions
title_short	Trade, Inequality, and the Political Economy of Institutions
title_full	Trade, Inequality, and the Political Economy of Institutions
title_fullStr	Trade, Inequality, and the Political Economy of Institutions
title_full_unstemmed	Trade, Inequality, and the Political Economy of Institutions
title_sort	trade, inequality, and the political economy of institutions
publishDate	2012
url	http://hdl.handle.net/10986/5668
_version_	1764395887746875392

Trade, Inequality, and the Political Economy of Institutions

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