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Party Activists, Campaign Funding and the Quality of Government

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  • John Maloney
  • Andrew Pickering

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Abstract

We study the formation of government policy in democracies when turnout depends on party activists and campaign spending ‐ parties’ ‘political capital’. The functional importance of political capital determines equilibrium rent-seeking in government. Often the more potent political capital is the greater the extent of rent-seeking. Limiting the level of political capital is distinct from reducing its potency, and whereas we find a strong case for reducing potency we find that placing limits on campaign spending are rarely optimal, and in particular that weak limits are never optimal. A limit on total campaign spending can increase government quality under certain conditions and if so then strong limits are always better than weak limits. However, finite limits on either national or local campaign spending alone, as often seen in practice, are never optimal.

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File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2010/wp252.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 10/252.

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Length: 43 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:bri:cmpowp:10/252

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Related research

Keywords: Party activists; campaign funding; rent-seeking; political finance;

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  1. Norman Schofield, 2007. "The Mean Voter Theorem: Necessary and Sufficient Conditions for Convergent Equilibrium," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 965-980.
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Cited by:
  1. John Maloney & Andrew Pickering, 2013. "Political Competition, Political Donations, Economic Policy and Growth," Discussion Papers 13/21, Department of Economics, University of York.

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