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ID:
183776
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| Summary/Abstract |
Foundational theories of trade politics emphasize a conflict between consumer welfare and protectionist lobbies. But these theories ignore other powerful lobbies that also shape trade policy. We propose a theory of trade distortion arising from conflict between consumer welfare and importer lobbies. We estimate the key parameter of the model—the government's weight on welfare—using original data from Venezuela, where Hugo Chávez used an exchange-rate subsidy to underwrite hundreds of billions of dollars of imports. Whereas estimates from traditional models would make Chávez look like a welfare maximizer, our results indicate that he implemented distortionary commercial policy to the benefit of special interests. Our analysis underscores the importance of tailoring workhorse models to account for differences in interest group configuration. The politics of trade policy is not reducible to the politics of protectionism.
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| 2 |
ID:
174461
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| Summary/Abstract |
Drug traffickers sometimes share profits peacefully. Other times they fight. We propose a model to investigate this variation, focusing on the role of the state. Seizing illegal goods can paradoxically increase traffickers’ profits, and higher profits fuel violence. Killing kingpins makes crime bosses short-sighted, also fueling conflict. Only by targeting the most violent traffickers can the state reduce violence without increasing supply. These results help explain empirical patterns of violence in drug war, which is less studied than are interstate or civil war but often as deadly.
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| 3 |
ID:
173140
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| Summary/Abstract |
Some theories predict that profits facilitate peace in illegal markets, while others predict that profits fuel violence. I provide empirical evidence from drug trafficking in Venezuela. Using original data, I compare lethal violence trends in municipalities near a major trafficking route to trends elsewhere, both before and after counternarcotics policy in neighboring Colombia increased the use of Venezuelan transport routes. For thirty years prior to this policy change, lethal violence trends were similar; afterward, outcomes diverged: violence increased more along the trafficking route than elsewhere. Together with qualitative accounts, these findings illuminate the conditions under which profits fuel violence in illegal markets.
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