Essays on international trade and factor mobility

This thesis is a collection of three essays on international trade and factor mobility. The first two papers address the political economy of policy formation in international markets, while the third paper is a contribution to the literature on Pareto gains from trade.; In the first essay, we review the literature on the political economy of international trade and factor mobility. We start asking whether, from a normative perspective, it is possible to rank policies towards trade and factor mobility. We then examine models in which trade policy is the result of influence driven contributions. Several estimations of these models have been performed and the results have been very supportive of the theoretical implications. We turn then to the literature on the political economy of factor movements. Papers in this area tend to focus on narrowly defined issues, and distortions in international labor and capital markets have been addressed separately.; In the second essay we develop the first general theory of the endogenous formation of policy towards international factor mobility. Policy is the result of the interaction between organized factors and an electorally motivated politician, and protection can take either the form of a tariff or of a quantitative restriction. From a theoretical perspective, we show that if the government is able to capture the quota revenues, there exists a strategic equivalence between the game played in the tariff space and that played in the quota space. We then characterize equilibrium policy, showing how protection depends both on whether the factor is organized or not, and on the degree of complementarity between factors. In particular, we show that the presence of a lobbying complement (substitute) has a negative (positive) impact on the degree of protection granted to a factor. We then perform a simple estimation of the model on a sample of OECD countries for 1995, finding support for its implications.; The third paper is a contribution to the literature on Pareto gains from trade. We propose a new mechanism to redistribute the gains from trade, to ensure that no agent is made worse off following trade liberalization. In our mechanism, the production side of the economy is exposed to international competition. On the consumption side, agents have the choice of either paying a fee and enter a duty free zone to trade at international prices, or of staying out and facing autarkic prices. We show that such a duty free zone exists and will be frequented by a non-empty subset of the population. Also, we show how this mechanism Pareto dominates the classic second best commodity taxation scheme proposed by Dixit and Norman (1980).