We present a model where trade agreements are motivated by the desire of governments to commit vis-à-vis domestic lobbies, in addition to standard terms-of-trade
externalities. The model predicts that trade liberalization is deeper when capital is more mobile across sectors, and when governments are more politically motivated (provided domestic-commitment motives are strong enough). The model also provides a new rationale for the use of tariff ceilings. In a fully dynamic specification of the model, tariffs are reduced in two stages: an immediate cut and a subsequent gradual reduction, with the speed of liberalization increasing in the degree of capital
mobility. (JEL D72, F13)
Maggi, Giovanni, and Andrés Rodríguez-Clare.
2007."A Political-Economy Theory of Trade Agreements."American Economic Review,
97(4): 1374-1406.DOI: 10.1257/aer.97.4.1374