Resource title

Rent destruction and the political viability of free trade agreements

Resource image

image for OpenScout resource :: Rent destruction and the political viability of free trade agreements

Resource description

This paper studies the political viability of free trade agreements (FTAs). The key element of the analysis is the "rent destruction" that these arrangements induce: by eliminating intrabloc trade barriers, an FTA lowers the incentives of import-competing industries to lobby for higher external tariffs, thereby inducing a reduction of the rents created in the lobbying process. Using a conventional competitive model, I show that the prospect of rent destruction can critically undermine (and in some cases rule out entirely) the political viability of welfarereducing FTAs. This result contrasts sharply with findings from the earlier regionalism literature.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

Resource resource URL

http://eprints.lse.ac.uk/37553/

Resource license