This paper investigates the consequences of an increase in the number of newspapers on the quantity and quality of news provided and, ultimately, changes in political participation. Drawing from the literature on vertical product differentiation to model the production choices of newspapers, I show how an increase in the number of newspapers can decrease both the quantity and quality of information provided. I build a new county-level panel dataset of local newspaper presence and political turnout in France, from 1945 to 2012. I estimate the effect of newspaper entry by comparing counties that experience entry to similar counties in the same years that do not. These counties exhibit similar trends prior to newspaper entry, but newspaper entry then leads to substantial declines in the total number of journalists. More newspapers are also associated with fewer news articles and lower information provision. These effects are concentrated in counties with homogeneous populations, as predicted by the model, with little impact on counties with heterogeneous populations. Newspaper entry, and the associated decline in information provision, is ultimately found to decrease voter turnout.
This article delves into the relationship between newspaper readership and civic attitudes, and its effect on economic development. To this end, we investigate the long-term consequences of the introduction of the printing press in the 19th century. In sub-Saharan Africa, Protestant missionaries were the first both to import the printing press technology and to allow the indigenous population to use it. We build a new geocoded dataset locating Protestant missions in 1903. This dataset includes, for each mission station, the geographic location and its characteristics, as well as the educational and health-related investments undertaken by the mission. We show that, within regions located close to missions, proximity to a printing press significantly increases newspaper readership today. We also document a strong association between proximity to a printing press and contemporary economic development. Our results are robust to a variety of identification strategies.
This paper studies the effect of firm and country reputation on exports when buyers cannot observe quality prior to purchase. Firm-level demand is determined by expected quality, which is driven by the dynamics of consumer learning through experience and the country of origin’s reputation for quality. We show that asymmetric information can result in multiple steady-state equilibria with endogenous reputation. We identify two types of steady states: a high-quality equilibrium (HQE) and a low-quality equilibrium (LQE). In a LQE, only the lowest-quality and the highest-quality firms are active; a range of relatively high-quality firms are permanently kept out of the market by the informational friction. Countries with bad quality reputation can therefore be locked into exporting low-quality, low-cost goods. Our model delivers novel insights about the dynamic impact of trade policies. First, an export subsidy increases the steady-state average quality of exports and welfare in a LQE, but decreases both quality and welfare in a HQE. Second, there is a tax/subsidy scheme based on the duration of export experience that replicates the perfect information outcome. Third, a large reputation shock is self-fulfilling when the economy has multiple steady states. Finally, a minimum quality standard can help an economy initially in a LQE moving to a HQE, but is not necessarily welfare improving.
This paper puts the recent evolution of tax revenues in developing countries in historical perspective. Using a novel dataset on total and trade tax revenues we compare the fiscal cost of trade liberalization in developing countries and in today's rich countries at earlier stages of development. We find that trade liberalization episodes led to larger and longer-lived decreases in total tax revenues in developing countries since the 1970s than in rich countries in the 19th and early 20th centuries. The fall in total tax revenues lasts more than ten years in half the developing countries in our sample.
We investigate theoretically and empirically the determinants of second-degree price discrimination in two-sided markets. We build a model in which a newspaper must attract both readers and advertisers. Readers are uncertain as to their future benefit from reading, and heterogeneous in their taste for reading. Advertisers are heterogeneous in their outside option, taste for subscribers, and taste for occasional buyers. To estimate empirically the effect of the advertisers’ side of the industry on price discrimination on the readers’ side, we use a “quasi-natural experiment”. We exploit the introduction of advertisement on French Television in 1968, which we treat as a negative shock on advertisement revenues of daily national newspapers (treated group), but not on daily local newspapers (control group). We build a new dataset on French local newspapers between 1960 and 1974 and perform a Differences-in-Differences analysis. We find robust evidence of increased price discrimination as a result of a drop in advertisement revenues.
Official Development Aid flows are volatile, non-predictable and not delivered in a transparent way. All these features reinforce asymmetric information between the citizens and the recipient government about the amount of aid flows received by developing countries. This article uses a political economy model of rent extraction to show how this asymmetry (i) encourages rent extraction by kleptocratic regimes, thus reducing aid efficiency, and (ii) increases the negative impact of aid volatility. It identifies a new channel - the "asymmetric information" channel - through which aid volatility is costly for recipient countries. The empirical relevance of the model is confirmed on a panel data of developing countries. Using various specifications and econometric methods, and developing new yearly estimates of aid volatility, I show that (i) introducing more information increases aid efficiency, that (ii) the negative impact of aid volatility on aid efficiency vanishes once one controls for information, and that (iii) this positive impact of information does not come from the fact that more transparent countries tend to have better institutions.