DP5452 Protection for Sale Made Easy

Author(s): Richard Baldwin , Frédéric Robert-Nicoud

Publication Date: January 2006

Keyword(s): protection for sale , endogenous protection

JEL(s): H32 , P16

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP5452.asp

Formal analysis of the political economy of trade policy was substantially redirected by the appearance of Gene Grossman and Elhanan Helpman's 1994 paper, 'Protection for Sale'. Before that article a fairly wide range of approaches were favoured by various authors on various issues, but afterwards, the vast majority of theoretical tracts on endogenous trade policy have used the Protection for Sale framework (PFS for short) as their main vehicle. The reason, of course, is that the framework is both respectable - because its microfoundations are distinctly firmer than were those of the earlier lobbying approaches - and it is very easy to work with. Despite the popularity of the PFS framework, it appears that no one has presented a simple diagram that illustrates how the PFS frameworks and explains why it is so easy. This short note aims to remedy that omission.