Citation

Discussion Paper Details

Please find the details for DP8726 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The Dracula Effect: Voter Information and Trade Policy

Author(s): Ruben Enikolopov, Maria Petrova and Giacomo AM Ponzetto

Publication Date: December 2011

Keyword(s): Dracula effect, Imperfect information, Media coverage, Pareto inefficiency, Protectionism and Voters

Programme Area(s): International Trade and Regional Economics

Abstract: Trade barriers cause substantial deadweight losses, yet they enjoy surprising voter support. We develop an electoral model that accounts for this puzzling popularity of protectionism. Producers have incentives to acquire information about their own sector, while consumers do not. As a result, trade barriers are popular because they are disproportionately noticed by their beneficiaries. In equilibrium, politicians give every sector positive protection. This protectionist bias induces Pareto inefficiency if public information is too limited. Our model predicts a Dracula Effect: trade policy for an industry is less protectionist when public awareness of it is greater. We test this prediction empirically across U.S. manufacturing industries, exploiting the timing of industrial accidents relative to other newsworthy events as a source of exogenous variation in media coverage of each sector. As predicted by our theory, industries whose accidents occur on slow news days subsequently enjoy lower non-tariff barriers.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8726

Bibliographic Reference

Enikolopov, R, Petrova, M and Ponzetto, G. 2011. 'The Dracula Effect: Voter Information and Trade Policy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8726