An analysis of a small sample of countries shows that the higher the level of termsof-trade risk that a nation faces in international markets, the more likely it is to increase barriers. The analysis also shows that the greater the availability of social insurance programs mounted by a nation's government, the less likely it is to block free trade. In comparison with the small open economies of Western Europe, therefore, developing countries may remain protectionist because they lack the resources to mount internal programs of transfer payments as a means of coping with risk from international markets.

The unexpected approval in 1986 of the Single European Act and its program for completing the European Community's internal market by 1992 did not, according to the historical data presented in this article, result from an elite alliance of the European Community Commission, European Parliament, and pan-European business groups. Instead, it rested on interstate bargains involving Britain, France, and Germany, for which the two essential preconditions were the convergence of European economic policy prescriptions following the French turnaround in 1983 and the bargaining leverage that France and Germany gained by threatening to create a “two-track” Europe and exclude Britain. This suggests that theories stressing supranational factors, including certain variants of neofunctionalism, should be supplanted by an “intergovernmental institutionalise” approach combining a realist emphasis on state power and national interests with a proper appreciation of the important role of domestic factors in determining the goals that governments pursue.

The political economy of trade policy has largely neglected popular elections. When legislatures determine protection, politicians supply tariffs that are demanded by their constituents. A model of this political market is specified and tested with data related to the McKinley Tariff of 1890. An index of the extent to which tariff protection accrued to individual congressional districts is applied, along with demand and supply variables, to three questions: Did representatives supply tariffs to their districts as the model predicts? Did they vote in accordance with the district tariff interest in the roll-call vote on the McKinley Tariff? Did electors reward representatives for the district tariff protection in a manner consistent with a political market model? Empirical estimations based on the model provide answers that are generally affirmative and appear to be inconsistent with the traditional view that the Republican defeat in 1890 was a result of the McKinley Tariff.

Concepts from bargaining theory and neorealist theory are integrated in a partners-and-rivals (PAR) model that explains the terms of collaboration between rational actors (for example, firms) that are potential competitors. The model contends that the stronger player's incentive to collaborate is determined not only by its interest in absolute welfare benefits from collaboration but also by its concern about and loss of utility from unfavorable shifts in relative position vis-à-vis the weaker player. Two propositions are derived from the model. According to the disparity principle, the stronger player's net payoff from collaboration (the sum of its welfare benefits and positional costs) is a function of the disparity in capabilities between the two players. The net payoff curve is low when the disparity in capabilities is large, reaches an optimum when the disparity is moderate, and then falls again as the disparity approaches zero. The slope of the curve is also affected by a coefficient, α, which reflects the stronger player's sensitivity to positional losses. According to the compensation principle, for collaboration to arise, the weaker player must make an adjustment in the terms of the bargain, or a side-payment, to compensate the stronger player for its positional losses from collaboration. The validity of the PAR model is tested by comparing Franco-German collaboration on military aircraft in two cases, one in which the disparity in capabilities between the players was moderate and the other in which the disparity was small.