| Περίληψη : | What is political economy and how does it interact with trade policy? This is the main question that this dissertation attempts to answer. The notions and concepts of this subject are presented through various economic models which elaborate classical Economic Theory, Theory of Political Economy as well as Game Theory. The analysis begins with a median-voter model, where the interaction of the lobbies interests and social welfare (the interest of the median voter-citizen)exert pressures on the government when choosing its trade policy. The government has to balance between these two sources of political pressure in order to secure its political future. The second model is the one of the campaign contributions approach. This model examines the consequences of the financial support the lobbies provide to a government and the economic benefits they enjoy in this way, and how these benefits affect the economic status of the average citizen. In all economic models of this dissertation, the trade policy that the government has chosen is expressed through tariffs and subsidies. The third economic model is the one that examines political contributions, where the competition among politicians is neglected and there a single incumbent government to chose the trade policy of the country. Again, the interests of the different lobby-groups and the welfare of the average citizen are in conflict. Afterwards, the analysis proceeds to the main theoretical pillar of political economy and trade policy, to the protection for sale model. In this model special attention is put on the fact that the government in order to secure political support protects its domestic industries from international competition by imposing tariffs and subsidies. This creates domestic political fluctuations, but the government is assumed to be more orientated towards the support it will receive from the different industrial lobbies rather than from the average voter. The two models that follow in the analysis, the endogenous lobbies model and protection across industries and countries model, elaborate different issues that stem from the protection from sale model analysis and in this way this dissertation provides completeness in notions and concepts. For example, in the endogenous lobbies’ model, the formation of the different lobbies is treated as endogenous and in the protection across industries and countries model there takes place a debate between multilateralism and bilateralism. Finally, the two country model provides a deeper theoretical insight on the trade agreements between two countries and their political implications on the domestic and international level, while the regional trade agreements model implements stricter constraints on these agreements’s framework.Political economy and trade policy is a fascinating and rather recent area of economic research and so far, it appears to be a very promising one.
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