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Public Funding of Political Parties

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  • Christian Schultz
  • Ignacio Ortuno-OrtÍn

Abstract

This paper concerns public funding of parties. Parteis receive public funds depending on their vote share. Funds finance electoral campaigns. Two cases are investigated. In the first, some voters are policy motivated and some are ?impressionable? ? their vote depends directly on campaign expenditures. In the second, campaigning is informative and all voters are policy motivated. Public funds increase policy convergence in both cases. The effect is larger, the more funding depends on vote shares. When campaigns are informative, there may be multiple euqilibria. Intuitively, a large party can stay large since it receives large funds.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2000/wp-cesifo-2000-11/cesifo_wp368.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 368.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_368

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References

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  1. Torsten Persson & Guido Tabellini, . "Political Economics and Public Finance," Working Papers 149, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Ignacio Ortuno-Ortin & Anke Gerber, 1998. "Political compromise and endogenous formation of coalitions," Social Choice and Welfare, Springer, vol. 15(3), pages 445-454.
  3. Butters, Gerard R, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 465-91, October.
  4. Ignacio OrtuÓo-OrtÎn, 1997. "A spatial model of political competition and proportional representation," Social Choice and Welfare, Springer, vol. 14(3), pages 427-438.
  5. Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, vol. 68(2), pages 246-50, May.
  6. Mueller, Dennis C & Stratmann, Thomas, 1994. " Informative and Persuasive Campaigning," Public Choice, Springer, vol. 81(1-2), pages 55-77, October.
  7. Gene Grossman & Elhanan Helpman, 1994. "Electoral Competition and Special Interest Politics," NBER Working Papers 4877, National Bureau of Economic Research, Inc.
  8. Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 63-81, January.
  9. McKelvey, Richard D. & Ordeshook, Peter C., 1987. "Elections with limited information: A multidimensional model," Mathematical Social Sciences, Elsevier, vol. 14(1), pages 77-99, August.
  10. Rebecca Morton & Charles Cameron, 1992. "Elections And The Theory Of Campaign Contributions: A Survey And Critical Analysis," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 79-108, 03.
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Citations

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Cited by:
  1. 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.
  2. Ioulia V. Ossokina & Otto Swank, 2001. "The Optimal Degree of Polarization," Tinbergen Institute Discussion Papers 01-063/1, Tinbergen Institute.
  3. Westermark, Andreas, 2001. "Campaigning and Ambiguity when Parties Cannot Make Credible Election Promises," Working Paper Series 568, Research Institute of Industrial Economics.
  4. Christian Schultz, 2003. "Strategic Campaigns and Redistributive Politics," EPRU Working Paper Series 03-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  5. Stephen Coate, 2004. "Political Competition with Campaign Contributions and Informative Advertising," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 772-804, 09.
  6. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
  7. Westermark, Andreas, 2004. "Extremism, campaigning and ambiguity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 421-452, May.
  8. Gersbach, Hans & Schneider, Maik T., 2012. "Tax contracts and elections," European Economic Review, Elsevier, vol. 56(7), pages 1461-1479.
  9. Hans Gersbach, 2009. "Campaigns, Political Mobility, and Communication," CESifo Working Paper Series 2834, CESifo Group Munich.
  10. Amihai Glazer & Mark Gradstein, 2005. "Elections with contribution-maximizing candidates," Public Choice, Springer, vol. 122(3), pages 467-482, March.
  11. Troumpounis, Orestis, 2012. "On the distribution of public funding to political parties," Economics Letters, Elsevier, vol. 116(3), pages 367-370.
  12. Jenny De Freitas, 2009. "Political support for the private system to finance political parties," DEA Working Papers 35, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  13. Thomas Stratmann, 2003. "Tainted Money? Contribution Limits and the Effectiveness of Campaign Spending," CESifo Working Paper Series 1044, CESifo Group Munich.

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