Economic crises can spark both protectionist and liberalizing trade policies.

Firm-Level Competition Driven by Crises

This article examines how economic shocks influence trade policy competition through the actions of firms.

* Intensity: The severity of the shock affects firm resources.

* Duration: How long the crisis lasts shapes political strategies.

Endogenous Incentives for Diverging Policies

Crises create incentives not just to protect, but also to liberalize trade:

* Protectionist Tendencies: Initially rise as affected firms lobby for relief and other industries face resource scarcity.

* Liberalization Trends: Subsequently decrease when distressed firms lack resources for lobbying, allowing counter-lobbying from healthier sectors.

Theoretical & Empirical Integration

Our theoretical model is grounded in real-world mechanisms:

* Tested using sub-national and cross-national datasets.

* Supported by illustrations of how resource shifts impact political maneuverings across industries.