A Price Theory of Propaganda

Abstract

Politicians need support (votes in democracies, compliance and participation in autocracies) and must pay for it through patronage, public services, and policy concessions. I model this as monopsony: the politician faces an upward-sloping supply curve of political support. Propaganda is a complement that shifts supply down by making compliance less distasteful. The politician equates the marginal cost of propaganda to the wage savings on inframarginal supporters. I prove three results. First, monopolists use more propaganda than competitive politicians because markdowns are larger and there is no free-riding on regime-level messaging. Second, coercion and propaganda are complements: coercion makes supply more inelastic (raising markdowns) and enables forced consumption of propaganda that citizens would otherwise reject. Third, the model predicts scale effects: propaganda's returns rise with population, implying that mass-mobilization autocracies should propagandize heavily while elite autocracies rely on direct payments. Cross-country patterns are consistent with these predictions, though the scale effect is modest.