ABSTRACT
Tariff policy was chosen as the specific subject matter of this study because, among other things, it can be employed to focus sharply on the issue of redistribution, has a methodological basis developed by existing endogenous tariff literature and is an interesting issue on its own account. Though the political economy approach did provide a consistent analytical framework within which the policy formation process could be modelled, the existing literature subscribing to this view has nevertheless left several fundamental questions unresolved. The original Nash solution to any arbitrary bargaining game, and issues related to its generalization in the presence of asymmetric bargaining powers were discussed in considerable detail which did yield some useful results. A government’s redistributive policy can consistently be viewed as an equilibrium outcome of a bargaining process between the organized interest groups holding conflicting interests on the level of the redistributive policy.
