Essays on Trade Policy and Education Choice

This thesis is about two major economic topics, trade policy and education choice. The first and the second essay analyze trade policy with special attention to tariff formation in intermediate-good sectors. The first essay explains tariff formation in intermediate-good sectors from a national perspective. I build a political economy model in which lobby groups try to influence the government, which is both concerned about social welfare and collecting contributions from the lobby groups. It turns out that in such a model the equilibrium tariffs on intermediate goods deviate systematically from the tariffs on final goods. The second essay analyzes the tariff formation in intermediate-good sectors from an international perspective. It shows in a strategic trade policy model that the consideration of intermediate goods has a strong effect on the government’s optimal policy towards final goods also. The third essay is about education choice. I introduce social preferences into a simple model of education choice. Social preferences mean that individuals are not only concerned about their material self interest, but also about their relative income in comparison to others. It is shown that the individuals with social preferences take a systematically different education choice than purely self-interested individuals. The results can explain empirical evidence concerning the educational success of students.