Earlier this month, Prof. Xenia Matschke got a paper accepted in the Canadian Journal of Economics. The paper titled “Trade Policy in Majoritarian Systems: The Case of the U.S.” was coauthored with Per Fredriksson (University of Louisville) and Jenny Minier (University of Kentucky). A previous version of this paper was published as UConn Economics Working Paper, “For Sale: Trade Policy in Majoritarian Systems“. Another paper by the same authors on the influence of a majoritarian electoral system on environmental tax policies was recently accepted for publication in the Journal of Environmental Economics and Management (see blog entry).
In the current paper on trade policy in majoritarian systems, Matschke and her coauthors provide a theory of trade policy determination that incorporates the protectionist bias inherent in majoritarian systems, as suggested by Grossman and Helpman (2005). The prediction that emerges is that in majoritarian systems, the majority party favors industries located disproportionately in majority districts. The authors test this prediction using U.S. data on tariffs, Congressional campaign contributions, and industry location in districts represented by the majority party over the period 1989-97. They find evidence of a significant majority bias in trade policy for the years when Democrats were the majority party in Congress. An industry’s estimated benefit from being represented by the majority party appears at least as large in magnitude as the benefit from lobbying.