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Tainted Money? Contribution Limits and the Effectiveness of Campaign Spending

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  • Thomas Stratmann

Abstract

Campaign expenditures are not effective in increasing candidates’ vote shares if voters do not respond to the advertisement when they believe that campaign expenditures are financed with “tainted money.” In this situation, limiting contributions may reduce the number of policy favors that candidates promise to contributors, and thereby increase the effectiveness of campaign spending. Exploiting cross-state variation in campaign finance laws, this paper tests whether campaign expenditures by state House candidates are more productive in increasing vote shares when candidates run in states that limit contributions. The results show that campaign expenditures by incumbents, challengers, and open seat candidates are more productive when candidates run in states with campaign contribution limits, as opposed to in states without limits. Controlling for the endogeneity of incumbent spending, the study shows that in states with contribution limits, incumbent spending and challenger spending are equally productive, and that spending by both candidates is quantitatively important in increasing their vote shares.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1044.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1044

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  1. Prat, A., 1998. "Campaign Spending with Office-Seeking Politicians, Rational Voters and Multiple Lobbies," Discussion Paper 1998-123, Tilburg University, Center for Economic Research.
  2. Grossman, Gene M & Helpman, Elhanan, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Wiley Blackwell, vol. 63(2), pages 265-86, April.
  3. Dennis Coates, 1998. "Additional incumbent spending really can harm (at least some) incumbents: An analysis of vote share maximization," Public Choice, Springer, vol. 95(1), pages 63-87, April.
  4. Martin J. Osborne & Al Slivinksi, 1995. "A Model of Political Competition with Citizen-Candidates," Department of Economics Working Papers 1995-01, McMaster University.
  5. Prat, Andrea, 2002. "Campaign Advertising and Voter Welfare," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 999-1017, October.
  6. Milyo, Jeffrey & Groseclose, Timothy, 1999. "The Electoral Effects of Incumbent Wealth," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 699-722, October.
  7. Potters, J.J.M. & Sloof, R. & Winden, F.A.A.M. van, 1997. "Campaign Expenditures, Contributions and Direct Endorsements: The Strategic Use of Information and Money to Influence Voter Behavior," Discussion Paper 1997-27, Tilburg University, Center for Economic Research.
  8. Christian Schultz & Ignacio Ortuno-OrtÍn, 2000. "Public Funding of Political Parties," CESifo Working Paper Series 368, CESifo Group Munich.
  9. Stratmann, Thomas, 2002. "Can Special Interests Buy Congressional Votes? Evidence from Financial Services Legislation," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 345-73, October.
  10. Levitt, Steven D, 1994. "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 777-98, August.
  11. Stratmann, Thomas, 1995. "Campaign Contributions and Congressional Voting: Does the Timing of Contributions Matter?," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 127-36, February.
  12. Daniel, Kermit & Lott, John R, Jr, 1997. " Term Limits and Electoral Competitiveness: Evidence from California's State Legislative Races," Public Choice, Springer, vol. 90(1-4), pages 165-84, March.
  13. Thomas Stratmann & Francisco J. & Aparicio-Castillo, 2006. "Competition policy for elections: Do campaign contribution limits matter?," Public Choice, Springer, vol. 127(1), pages 177-206, April.
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Cited by:
  1. Thomas Stratmann, 2003. "Do Strict Electoral Campaign Finance Rules Limit Corruption?," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(1), pages 24-27, 02.

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