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Intra-industry trade and protectionism: the case of the buy national policy

Dong-Hun Kim
Public Choice
Vol. 143, No. 1/2 (April 2010), pp. 49-65
Published by: Springer
Stable URL: http://www.jstor.org/stable/40661004
Page Count: 17
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Intra-industry trade and protectionism: the case of the buy national policy
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Abstract

This article examines the factors that lead governments to open up their public procurement markets to international competition with a particular emphasis on the effect of intra-industry trade. Contrary to the conventional notion that intra-industry trade entails less political pressure for protectionism than inter-industry trade, I argue that such notion does not prevail in the case of discriminatory public procurement. Firms in a market with a high degree of intra-industry trade are more likely to resist the removal of discrimination than would firms in a market with a high degree of inter-industry trade. Empirically, I find support for the argument both at sub-national and cross-national settings.

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