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Political Competitiveness

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Author Info
Casey B. Mulligan
Kevin K. Tsui

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Abstract

Political competitiveness – which many interpret as the degree of democracy – can be modeled as a monopolistic competition. All regimes are constrained by the threat of "entry," and thereby seek some combination of popular support and political entry barriers. This simple model predicts that many public policies are unrelated to political competitiveness, and that even unchallenged nondemocratic regimes should tax far short of their Laffer curve maximum. Economic sanctions, odious debt repudiation, and other policies designed to punish dictators can have the unintended consequences of increasing oppression and discouraging competition. Since entry barriers are a form of increasing returns, democratic countries (defined according to low entry barriers) are more likely to subdivide and nondemocratic countries are more likely to merge. These and other predictions are consistent with previous empirical findings on comparative public finance, election contests, international conflict, the size of nations, and the Lipset hypothesis. As in the private sector, the number of competitors is not necessarily a good indicator of public sector competitiveness.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12653.

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Date of creation: Oct 2006
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Handle: RePEc:nbr:nberwo:12653

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Find related papers by JEL classification:
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daron Acemoglu & James A. Robinson, 2006. "Persistence of Power, Elites and Institutions," NBER Working Papers 12108, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Casey B. Mulligan & Kevin K. Tsui, 2008. "Political Entry, Public Policies, and the Economy," NBER Working Papers 13830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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