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Social Ideology and Taxes in a Differentiated Candidates Framework

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  • Stefan Krasa
  • Mattias Polborn

Abstract

How does ideological polarization on non-economic matters influence the size of government? We analyze this question using a differentiated candidates framework: Two office-motivated candidates differ in their (fixed) ideological position and their production function for public goods, and choose which tax rate to propose. We provide conditions under which a unique equilibrium exists. In equilibrium, candidates propose different tax rates, and the extent of economic differentiation is influenced by the distribution and intensity of non-economic preferences in the electorate. In turn, the extent of economic differentiation influences whether parties divide the electorate primarily along economic or social lines.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3503.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3503

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Keywords: differentiated candidates; policy divergence; ideology;

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  1. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(2), pages 465-90, May.
  2. Alessro Lizzeri & Nicola Persico, . "The Provision of Public Goods Under Alternative Electoral Incentives," Penn CARESS Working Papers, Penn Economics Department b96440ba0bfa06ca550ac40aa, Penn Economics Department.
  3. Besley, Timothy & Coate, Stephen, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 85-114, February.
  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. Fernández, Raquel & Levy, Gilat, 2008. "Diversity and redistribution," Journal of Public Economics, Elsevier, Elsevier, vol. 92(5-6), pages 925-943, June.
  6. Lindqvist, Erik & Östling, Robert, 2006. "Political Polarization and the Size of Government," Working Paper Series in Economics and Finance 628, Stockholm School of Economics, revised 02 Jul 2007.
  7. Stefan Krasa & Mattias Polborn, 2009. "Political Competition between Differentiated Candidates," CESifo Working Paper Series 2560, CESifo Group Munich.
  8. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 600-621, June.
  9. Stefan Krasa & Mattias Polborn, 2010. "Competition between Specialized Candidates," CESifo Working Paper Series 2930, CESifo Group Munich.
  10. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(5), pages 914-27, October.
  11. Woojin Lee & John E. Roemer, 2004. "Racism and Redistribution in the United States: A Solution to the Problem of American Exceptionalism," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1462, Cowles Foundation for Research in Economics, Yale University.
  12. Austen-Smith, David & Wallerstein, Michael, 2006. "Redistribution and affirmative action," Journal of Public Economics, Elsevier, Elsevier, vol. 90(10-11), pages 1789-1823, November.
  13. Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, Elsevier, vol. 70(3), pages 399-424, December.
  14. Alessandro Lizzeri & Nicola Persico, 2004. "Why Did the Elites Extend the Suffrage? Democracy and the Scope of Government, With an Application to Britain's "Age of Reform"," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 705-763, May.
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Cited by:
  1. Stefan Krasa & Mattias Polborn, 2012. "Elites or Masses? A Structural Model of Policy Divergence, Voter Sorting and Apparent Polarization in U.S. Presidential Elections, 1972-2008," CESifo Working Paper Series 3752, CESifo Group Munich.

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