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On the distribution of public funding to political parties

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  • Troumpounis, Orestis

Abstract

The distribution of direct public funding to political parties is based on two criteria: (1) performance at the election (funding per vote), or (2) representation in the parliament (funding per seat). Using a two-party group turnout model, we compare the effect of the two funding systems on parties’ mobilization effort and the equilibrium turnout. Allowing one party to have a larger support than the other, we uncover interesting differences regarding the equilibrium structure: while in the unique equilibrium of per seat funding systems both parties exert the same amount of effort, a per vote funding system results in an asymmetric equilibrium in which the advantaged party exerts higher effort than its opponent. We furthermore show that, at the same cost, a per vote funding system always yields higher turnout than a per seat funding system, sacrificing the representativity of the electoral outcome.

Suggested Citation

  • Troumpounis, Orestis, 2012. "On the distribution of public funding to political parties," Economics Letters, Elsevier, vol. 116(3), pages 367-370.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:367-370
    DOI: 10.1016/j.econlet.2012.04.001
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    References listed on IDEAS

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    1. Ignacio Ortuno‐Ortín & Christian Schultz, 2005. "Public Funding of Political Parties," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(5), pages 781-791, December.
    2. Helios Herrera & Andrea Mattozzi, 2010. "Quorum and Turnout in Referenda," Journal of the European Economic Association, MIT Press, vol. 8(4), pages 838-871, June.
    3. Barry Nalebuff & Ron Shachar, 1999. "Follow the Leader: Theory and Evidence on Political Participation," American Economic Review, American Economic Association, vol. 89(3), pages 525-547, June.
    4. Snyder, James M, 1989. "Election Goals and the Allocation of Campaign Resources," Econometrica, Econometric Society, vol. 57(3), pages 637-660, May.
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    Cited by:

    1. Köppl-Turyna, Monika, 2017. "Public funding of parties and political polarization," Working Papers 03, Agenda Austria.
    2. Bruno Carvalho, 2021. "Campaign Spending in Local Elections: the Effects of Public Funding," Working Papers ECARES 2021-30, ULB -- Universite Libre de Bruxelles.
    3. Ignacio Ortuño Ortín & Christian Schultz, 2012. "Public funding of political parties when campaigns are informative Abstract: The paper considers public funding of political parties when some voters are poorly informed about parties? candidates and campaigns are informative. For symmetric equilibri," EPRU Working Paper Series 2012-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    4. Köppl Turyna, Monika, 2015. "How asymmetric funding of parties can lead to political polarization," MPRA Paper 64200, University Library of Munich, Germany.
    5. Guadalupe Correa-Lopera & Bernardo Moreno, 2025. "Voting equilibria and public funding of political parties," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 64(4), pages 699-720, June.

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    Keywords

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    JEL classification:

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

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