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Campaign Contributions and Political Polarization

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  • Tarhan, Simge
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    Abstract

    Political candidates raise campaign funds from a variety of sources. Whether contributions from certain sources should be restricted has been the subject of debate in the U.S. since the Federal Election Campaign Act of 1971. I contribute to this debate by showing that the source of contributions affects the policy choice of candidates. When lobby contributions are limited, and candidates need to choose between costly fundraising activities or self-financing of the campaign, two types of candidates emerge: "rich" candidates with non-partisan positions and "poor" candidates choosing policies along party lines. An implication of the model is that restricting self-finance causes policy platforms to diverge under certain conditions. For instance, the Millionaires' Amendment in McCain-Feingold, which raised limits on contributions for candidates whose opponent is relying heavily on personal funds, could increase political polarization in the United States.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29617.

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    Date of creation: 01 Nov 2010
    Date of revision: 15 Mar 2011
    Handle: RePEc:pra:mprapa:29617

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    Keywords: Campaign finance; contribution limits; PACs; partisan voters; self-financing;

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    1. 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.
    2. Michael Ensley, 2009. "Individual campaign contributions and candidate ideology," Public Choice, Springer, vol. 138(1), pages 221-238, January.
    3. Austen-Smith, David, 1998. "Allocating Access for Information and Contributions," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(2), pages 277-303, October.
    4. Mark Wright & Igor Livshits, 2007. "Greed as a Source of Polarization," 2007 Meeting Papers 765, Society for Economic Dynamics.
    5. Mueller, Dennis C & Stratmann, Thomas, 1994. " Informative and Persuasive Campaigning," Public Choice, Springer, vol. 81(1-2), pages 55-77, October.
    6. Alberto F. Alesina & Richard T. Holden, 2008. "Ambiguity and Extremism in Elections," NBER Working Papers 14143, National Bureau of Economic Research, Inc.
    7. Christopher Cotton, 2008. "Should We Tax or Cap Political Contributions? A Lobbying Model with Policy Favors and Access," Working Papers 0901, University of Miami, Department of Economics.
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