What is it about?
This paper investigates how spending by special interest groups can influence an election fought over trade policy. It assumes voters earn income from both capital and labour and capital. If voters live in a capital abundant country, they know that trade liberalization will increase their earnings from capital but reduce their earnings from labour (the Stolper-Samuelson theorem), but they do not know the magnitudes. Hence, they don’t know if they benefit or lose, overall. Special interest groups who are highly endowed with a given factor can use campaign contributions to send a credible signal to voters of the magnitude of the effect on labour and capital incomes.
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Why is it important?
Large sums are spent by special interest groups trying to influence election outcomes. Clearly, those making the expenditures must believe they affect the outcome of elections. Yet it is not clear why voters would vote for parties that receive more funding from special interest groups. This paper offers one explanation.
Perspectives
This is a topic I first became interested in as an undergraduate student. During the 1988 Canadian election over a free trade agreement with the United States, special interest groups on both sides expended significant resources to influence the outcome of the election. Yet neither side made arguments consistent with what I had learnt in my international trade courses. I found this to be a puzzle that I finally tried to explain in this paper.
Derek Pyne
Thompson Rivers University
Read the Original
This page is a summary of: Microfoundations of Influencing Public Opinion: Lobbying and Voting for Trade Policies, Journal of Economic Integration, September 2006, Center for Economic Integration,
DOI: 10.11130/jei.2006.21.3.551.
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