The New Political Economy of Trade : : Heterogeneous Firms and Trade Policy

The increased availability and quality of micro-level datasets has led to a revolution in the study of the economics of international trade. In this project, I extend the insights gained from recent advances in trade theory to their political-economy implications. That is, the variations in producers' characteristics - especially productivity - that determine their economic behaviors also govern their policy positions and political behaviors in predictable ways. Highly productive firms are more likely to favor trade liberalization and participate actively in political processes, while low productivity firms are more likely to favor protection, and are less likely to engage in politics. I apply my theory to an original survey of Japanese manufacturers, a large cross section of publicly-held American firms, and two of the industries that battled over the Smoot-Hawley Tariff of 1930, finding support for my mode