We analyze unilateral, efficient and Nash trade policies in a symmetric, two-country version of the Melitz-Ottaviano (2008) model. Starting at global free trade, we show that a country gains from the introduction of (1) a small import tariff; (2) a small export subsidy, if trade costs are low and the dispersion of productivities is high; and (3) an appropriately combined small increase in its import and export tariffs. The welfare of its trading partner, however, falls in each of these three cases. The market may provide too little or too much entry, depending on a simple relationship among model parameters. Correspondingly, global free trade is generally not efficient, even within the class of symmetric trade policies. We also provide conditions under which, starting at the symmetric Nash equilibrium, countries can mutually gain by exchanging small reductions in import tariffs, export tariffs or combinations thereof. More generally, we show that Nash equilibria are inefficient while “politically optimal” policies are efficient, indicating a central role for the terms-of-trade externality. We also discuss why the model's implications for the treatment of export subsidies in trade agreements differ from those that obtain in a model with CES preferences for the differentiated-goods sector.
Tim Haughton is a Senior Associate Professor of European Politics at the University of Birmingham, where he served as Head of the Department of Political Science and International Studies (2016-18) and the Director of the Centre for Russian, European and Eurasian Studies (2012-14). Dr Haughton was educated at the London School of Economics and University College London. He has held Visiting Fellowships at Harvard University’s Center for European Studies, the Institute for Human Sciences in Vienna, the Institute of International Relations in Prague, Colorado College and was an Austrian Marshall Plan Foundation Fellow at Johns Hopkins University's School of Advanced International Studies. Dr Haughton has good links with the policymaking community, having briefed inter alia five British Ambassadors to Slovakia before they took up their posts, and given several presentations on Central European politics at the Foreign Office in London and at the State Department in Washington DC.
Tim’s research interests encompass electoral and party politics, electoral campaigning, the role of the past in the politics of the present, the domestic politics of Slovakia, Slovenia and the Czech Republic and Brexit. He is the co-author with Kevin Deegan-Krause of The New Party Challenge: Changing Cycles of Party Birth and Death in Central Europe and Beyond (Oxford University Press, 2020), the author of Constraints and Opportunities of Leadership in Post-Communist Europe (Ashgate 2005), the editor of Party Politics in Central and Eastern Europe: Does EU Membership Matter? (Routledge, 2011) and served as the co-editor with Nathaniel Copsey of the Journal of Common Market Studies’ Annual Review of the European Union for nine years (2008-16).
Kevin Deegan-Krause is an Associate Professor of Political Science at Wayne State University. He received his undergraduate degree in Economics from Georgetown University in 1990 and his doctorate in Government from the University of Notre Dame in 2000. He has spent more than two decades studying how political parties compete against one another, and how that competition shapes what happens in a democracy. He has published what he learned from research on European political parties in several books book (Elected Affinities: Democracy and Party Competition in Slovakia and the Czech Republic published by Stanford University Press in 2006 and The New Party Challenge: Changing Cycles of Party Birth and Death in Central Europe and Beyond, published by Oxford University Press in 2020) and many articles in political science journals and he has been the editor of several other books and the European Journal of Political Research Political Data Yearbook (politicaldatayearbook.com) which provides an annual summary of political developments in European, North American and Asian democracies. His ongoing research focuses on the emergence of new political parties and the transformation of existing ones.
Together with his wife Bridget and his children Elena and Peter, Kevin is also engaged in his local community of Ferndale, Michigan, and in broader public concerns. He received a Truman Scholarship for public service in 1988, and his commitment to public service has included work with the U.S. Department of State and the Fulbright Commission, election observation with the Organization for Security and Cooperation in Europe, as well as service on Ferndale's elected Library Board and School Board. He has also worked with many other local voluntary organizations and nonpartisan advocacy groups including promoting fair district boundaries with Voters Not Politicians and encouraging ranked-choice voting with RankMIVote. His commitment to voter turnout and other forms of civic engagement is also part of his classroom teaching, including his introductory courses on the city of Detroit and engaged citizenship for students in Wayne State University's Honors College.
Co-sponsored by the Global Populisms Project
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Appeared originally in Lawfare, November, 2020
Code is law. Lawrence Lessig’s 1999 assertion was that in a digital world, programmers were scripting a values system into their technology, often in a fit of absent-mindedness. Twenty years later, the U.S. and Europe are living in the geopolitical landscape those early pioneers created. One-time plucky startups have grown into supergiants vacuuming up ever more data and market share. Artificial intelligence (AI) is becoming both an enabler for social well-being and an instrument of authoritarian control. Emerging technologies are transforming militaries, creating new battlefields and changing the nature of warfare. U.S. and Chinese officials crisscross the world in a geostrategic great game for 5G dominance. And social media has become a vector for bad actors—including illiberal states like Russia and China—to disrupt and degrade democracies. In 2020, code is power.
The coronavirus has accelerated these trends. The pandemic has fueled data processing in contact-tracing apps; exposed vulnerabilities in supply chains; created new dependencies in classrooms and boardrooms on video communications technologies; and powered a spike in anti-vaxxer disinformation, QAnon conspiracy theories and radicalization.
Read at The Berlin Pulse
How NATO can adapt to future challenges: Rose Gottemoeller, Former Deputy Secretary General, NATO, is interviewed in The Berlin Pulse.
The internet economy has produced digital platforms of enormous economic and social significance. These platforms—specifically, Google, Facebook, Amazon, Twitter, and Apple—now play central roles in how millions of Americans obtain information, spend their money, communicate with fellow citizens, and earn their livelihoods. Their reach is also felt globally, extending to many countries around the world. They have amassed the economic, social, and political influence that very few private entities have ever obtained previously. Accordingly, they demand careful consideration from American policymakers, who should soberly assess whether the nation’s current laws and regulatory institutions are adequately equipped to protect Americans against potential abuses by platform companies.
The Program on Democracy and the Internet at Stanford University convened a working group in January 2020 to consider the scale, scope, and power exhibited by the digital platforms, study the potential harms they cause, and, if appropriate, recommend remedial policies. The group included a diverse and interdisciplinary group of scholars, some of whom had spent many years dealing with antitrust and technology issues.
ANTITRUST AND PRIVACY CONCERNS are two of the most high-profile topics on the tech policy agenda. Checks and balances to counteract the power of companies such as Google, Amazon, and Facebook are under consideration in Congress, though a polarized political environment is a hindrance. But a domestic approach to tech policy will be insufficient, as the users of the large American tech companies are predominantly outside the United States. We need to point the way toward a transnational policy effort that puts democratic principles and basic human rights above the commercial interests of these private companies.
These issues are central to the eight-week Stanford University course, “Technology and the 2020 Election: How Silicon Valley Technologies Affect Elections and Shape Democracy.” The joint class for Stanford students and Stanford’s Continuing Studies Community enrolls a cross-generational population of more than 400 students from around the world.
