Theory of Protectionism Fluctuations Caused by a Support-Maximizing Government
Sieg, Gernot, Atlantic Economic Journal
The level of protection can be explained as an equilibrium in the political market of protection, with the government or parties as monopolistic suppliers and pressure groups as demanders [Hillman, 1982]. Protection suppliers maximize their overall political support by choosing the level of protection that generates a politically optimal distribution of the economic rents that can be realized by the participants in each affected market [Stigler, 1972]. The behavior of economic agents in seeking to influence trade policy is predicated on their economic self-interest as gainers or losers from protectionist policies. The positive- or negative-influenced individual has two ways to influence political support. On the one hand, the individual can vote, the vote being direct political support. On the other hand, that individual can establish a pressure group for or against protection, The interest group approach [Becker, 1983; Dougan, 1984] shows that pro-protectionist interest groups of producers and owners of sector-specific factors are able to succeed, though many more voters, such as consumers, prefer free trade.
There are empirically evident [Bohara and Kaempfer, 1991] fluctuations of the protection level which cannot be explained by ideology, General Agreements on Tariffs and Trade negotiations, or other historical variables. Takacs  shows that although the pressure for protection increases in times of economic stress, the government does not necessarily respond to it, though the reason why is unknown. Furthermore, no theoretical explanation exists for that phenomenon called tariff cycle except a specific model with declining industries [Cassing et al., 1986; Cassing and Hillman, 19861.
This paper investigates fluctuations in protectionism caused by the supply side, i.e., government policy. The statistical nonsignificant hypothesis of Tosini and Tower [1987, p. 211 is the standard view of such dynamic variation of protection: "The more time a congressman has before he is up for reelection, the more he can afford to weigh the long-run term benefits of unfettered trade against the short-term benefits of protection. " Therefore, the optimal trade strategy for a government is a protectionist policy before and a non-protectionist policy after an election. The intuitive arguments are as follows: 1 pro-protectionist interest groups of import-competing industries are successful in supporting the government because they are small and organized; and 2) anti-protectionist interest groups of export industries and consumers are powerless because the losses of protection are spread over many losers [Olson, 1965]. The pro-protectionist interest groups support the government via contributions to the election campaign and the organized bloc of voters. During the campaign, this support is important for the government and, therefore, the government responds to the pressure with a protectionist policy.
But the following investigation shows that the changes of the government's trade policy are caused by changes in the relative power of pro- and anti-protectionist voters and are not caused by absolute high levels of interest groups' pressure. During the campaign, anti-protectionist consumers are important too, and only the relative power counts.
The present work investigates a theoretical model of dynamical protectionism in a political framework. It shows the dependence of the trade policy in a political system with regular elections and constant protectionist preferences of voters, interest groups, and politicians. Moreover, it disproves the common view of the tariff cycle.
II. The Model
The model is based on a VP-function [Nannestad and Paldam, 19941 and follows the Hibbs  approach. Voters evaluate the government during the election period. This valuation called popularity P depends on actual policy and reputation. The actual protectionist policy p is compared to the individually optimal policy. …