new  economy  and  trad

new economy and trad

Political- Economy of Tariff Policies: An Empirical Analysis of Market Power and Political Influence in Selected Asian Countries

Document Type : Research Paper

Author
Associate Professor, Department of Agriculture, Sayyed Jamaleddin Asadabadi University, Asadabad, Hamedan, Iran
10.30465/jnet.2026.52523.2229
Abstract
This study examines the joint role of economic and political factors in shaping import tariff policies by focusing on five Asian countries—Iran, Turkey, India, Pakistan, and China—over the period 2015–2020. The analysis is grounded in the political economy of trade, drawing on the theoretical frameworks developed by Grossman and Helpman (1994) and Helpman and Krugman (1995). Within this framework, tariffs are not determined solely by market-based considerations, such as export supply elasticity as a proxy for market power, but are also influenced by political forces, including industrial lobbying and political participation. Empirically, the analysis proceeds in two steps. First, export supply elasticities are estimated using a CES demand framework. Second, these economic measures are combined with political and institutional variables in a fixed-effects panel data model. This approach allows the study to control for unobserved, time-invariant heterogeneity across countries while assessing the determinants of tariff rates. The economically optimal tariff is derived from trade elasticities within the CES framework, whereas the politically optimal tariff is examined by extending the model to incorporate political and institutional factors through panel regression. The results show that export supply elasticity has a negative and statistically significant effect on tariff rates (−1.68),
Keywords

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  • Receive Date 21 July 2025
  • Revise Date 12 November 2025
  • Accept Date 21 December 2025