Within-Industry Technological Specialization, Collective Action, and Trade Policy

Abstract

The development of newer and better technologies has reshaped economic markets and will continue to do so in the future. New technologies are widely recognized as a driving force behind economic and political integration. The advent of newer, cheaper telecommunication and transportation methods has eroded social, political and economic barriers between countries. However, little is understood how technological progress has affected market structures and political outcomes–particularly outcomes related to the flow of goods from foreign competitors. This dissertation builds off prior work in many areas. I heavily borrow implications and assumptions from theories of factor mobility, collective action, economies of scale, innovation economics, and international trade. Factor mobility is an important determinant of whether or not actors in my theory care about their smaller group (industry) or their larger group (factor of production). I call the synthesis of these theories “within industry specialization” for the purposes of this dissertation. I argue that fixed costs can be treated as industry specific factor mobility. My idea of within industry specialization is just another type of fixed cost. To measure within industry specialization, I borrow from the economics of innovation. The literature on innovation argues that technological development makes new innovation increasingly harder, in both patents and academia. This means that we can proxy the difficulty/complexity of a field of knowledge by the size of a team necessary to create an innovation as each individual brings a small slice of the knowledge pie. The research question this dissertation ultimately seeks to answer is “when facing foreign competition, why do some industries receive trade protection while others do not?”