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A Theory of Small Campaign Contributions

Author

Listed:
  • Laurent Bouton
  • Micael Castanheira
  • Allan Drazen

Abstract

We propose a theory of small campaign contributions driven by an electoral motive, i.e., the desire to influence election outcomes. Though small donors take as given the actions of others, strategic interactions induce patterns consistent with empirical findings, e.g., election closeness and underdog effects. We also study different forms of campaign finance laws, and show why caps should be combined with a progressive tax on contributions. Next, we introduce large donors and show that several conclusions in the literature may be significantly modified by the interaction with small donors. Throughout, we discuss the empirical implications of our findings.

Suggested Citation

  • Laurent Bouton & Micael Castanheira & Allan Drazen, 2018. "A Theory of Small Campaign Contributions," NBER Working Papers 24413, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24413
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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