Quarterly Journal of Economics Vol. 111 No. 1 1996
Income Inequality and Choice of Free Trade in a Model of Intraindustry Trade
open access
Abstract
This paper explains why developed countries impose more trade barriers on middle-income countries than on either poor or other developed countries. We use a median voter model of the choice between trade and autarky embedded within an intraindustry trade model similar to Krugman. Our main result is the derivation of conditions under which a rich country rejects trade with middle-income countries, but accepts trade with either similar or poor countries. We also show that if increased inequality lowers median wealth in the developed country, the range of countries for which free trade is rejected is enlarged.
- DOI
- 10.2307/2946657
- Volume
- 111
- Issue
- 1
- Pages
- 41-64
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref