REDUNDANT TARIFFS AS RATIONAL ENDOGENOUS PROTECTION

Redundant protection, tariffs that exceed the domestic import-price di fferential, is an important feature of nineteenth century U.S. tariff history and remains a common practice in many developing countries. Th is paper develops political-economy models of the tariff setting proce ss when the world price of the importable product is stochastic. The o ptimal endogenous tariff may involve redundant protection even if agen ts are risk neutral. These political-economy models also permit us to assess the comparative static effects of changes in the mean-preservin g spread of the world price under differing assumptions about the poli tical process.