Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
7-2010
Abstract
We apply a duration analysis to test the conflicting predictions of the median voter model and the lobbying model using panel data on regional trade agreement (RTA) formation. Our results show that the pro-labor prediction of the median voter model is supported by the full-fledged free trade areas and customs unions (FTAs/CUs), while the pro-capital prediction of the lobbying model is supported by the partial-scope preferential trade arrangements among developing countries. This finding holds better for the country pairs with more different capital-labor ratios as a result of the stronger distributional effects of RTAs. The support for the median voter model (lobbying model) is stronger when the two countries in a pair have left-oriented (right-oriented) governments. I also find stronger support for the median voter model for the subset of FTAs/CUs with service coverage and stronger support for the lobbying model for countries that place higher weight on political contribution.
Journal Title
Southern Economic Journal
Journal ISSN
0038-4038
Volume
77
Issue
1
First Page
78
Last Page
103
Digital Object Identifier (DOI)
10.4284/sej.2010.77.1.78