Show Summary Details

Page of

PRINTED FROM OXFORD HANDBOOKS ONLINE ( © Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy and Legal Notice).

date: 23 April 2021

Abstract and Keywords

The revolution in firm-level approaches to trade has significant implications for how political economists approach trade-policy preferences and the demand for policy outcomes. Rather than focusing on factor mobility to explain political cleavages, firm-based political economy models emphasize the role of firm-level heterogeneity in predicting trade’s winners and losers. Trade is a rare activity among producers across all industries; its costliness limits participation to highly productive firms, although not all engage in trade. Thus, while competition from traded goods and services harms relatively unproductive firms, their highly productive counterparts gain from it. Consequently, the latter are much more likely to favor trade liberalization than are the former. As these high-productivity producers are also the most likely to engage in political activities, a clear mechanism exists for linking preferences to policy. These dynamics explain the variations in trade-policy outcomes that cannot be described through reliance on classical models.

Keywords: trade-policy preferences, firm-level heterogeneity, productivity

Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.

Please subscribe or login to access full text content.

If you have purchased a print title that contains an access token, please see the token for information about how to register your code.

For questions on access or troubleshooting, please check our FAQs, and if you can''t find the answer there, please contact us.