This paper develops a political economy model in order study the role of intra-elite con ‡ict in the simultaneous determination of the political regime, trade policy and a redistribution scheme based on income taxation. There are three socioeconomic groups: two elite factions and the workers), whose preferences over trade policy and income taxation are derived from a simple open economy model. The critical point is that income taxation induces a rich-poor/elite-workers political cleavage, while

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... trade policy opens the door to intra-elite con ‡ict. In this model, when there is no intra-elite con ‡ict, changes in trade policy are associated with political transitions. Coups (democratizations) open up the economy if and only if both elite factions are pro-free trade (protectionist). However, in the presence of intra-elite con ‡ict, autocracies respond to popular revolts by changing trade policy and reallocating political power within the elite (toward the elite faction with the same trade policy preference as the workers) rather than o¤ering democratization. The change in trade policy is credible because the elite faction with the same trade policy preference as the workers controls the autocracy. Moreover, in the presence of intra-elite con ‡ict, coups tend to maintain the trade policy, unless popular demands are extremely radical and/or the elite faction with the same trade policy preference as the workers is exceptionally weak. JEL Classi...cation: D72, D78.