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Two-party competition with persistent policies

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  • Forand, Jean Guillaume

Abstract

When campaigning for reelection, incumbent parties' promises to voters are constrained by their records in office, while opposition parties can use their time away from power to develop new platforms. In this paper, I introduce incumbent policy persistence in a dynamic game of electoral competition between two policy-motivated parties and characterise the long-run outcomes of its Markov perfect equilibria. Incumbents' reduced policy flexibility leads to alternation in power and policy dynamics that converge to alternations at policies equally preferred by the median voter. Convergence of policies towards the median is a robust equilibrium outcome while convergence to the median is not; while alternations far from the median are never limits of equilibrium dynamics, alternations close to the median can be reached only if policy dynamics start exactly there. I show that these results are robust to voters being forward-looking and to limited policy commitment by parties.

Suggested Citation

  • Forand, Jean Guillaume, 2014. "Two-party competition with persistent policies," Journal of Economic Theory, Elsevier, vol. 152(C), pages 64-91.
  • Handle: RePEc:eee:jetheo:v:152:y:2014:i:c:p:64-91
    DOI: 10.1016/j.jet.2014.03.014
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    Citations

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    Cited by:

    1. Gersbach, Hans & Muller, Philippe & Tejada, Oriol, 2016. "The Effects of Higher Re-election Hurdles and Costs of Policy Change on Political Polarization," CEPR Discussion Papers 11375, C.E.P.R. Discussion Papers.
    2. Bowen, T. Renee & Chen, Ying & Eraslan, Hülya & Zápal, Jan, 2017. "Efficiency of flexible budgetary institutions," Journal of Economic Theory, Elsevier, vol. 167(C), pages 148-176.
    3. Vincent Anesi, 2012. "A new old solution for weak tournaments," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 919-930, October.
    4. Zapal, Jan, 2016. "Markovian equilibria in dynamic spatial legislative bargaining: Existence with three players," Games and Economic Behavior, Elsevier, vol. 98(C), pages 235-242.
    5. Hans Gersbach & Philippe Muller & Oriol Tejada, 2017. "A Dynamic Model of Electoral Competition with Costly Policy Changes," CER-ETH Economics working paper series 17/270, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. César Martinelli & John Duggan, 2014. "The Political Economy of Dynamic Elections: A Survey and Some New Results," Working Papers 1403, Centro de Investigacion Economica, ITAM.
    7. Tasos Kalandrakis, 2016. "Pareto efficiency in the dynamic one-dimensional bargaining model," Journal of Theoretical Politics, , vol. 28(4), pages 525-536, October.
    8. Jan Zapal, 2014. "Simple Markovian Equilibria in Dynamic Spatial Legislative Bargaining," CERGE-EI Working Papers wp515, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Jean Guillaume Forand & John Duggan, 2013. "Markovian Elections," Working Papers 1305, University of Waterloo, Department of Economics, revised Oct 2013.
    10. Hans Gersbach & Philippe Muller & Oriol Tejada, 2015. "Costs of Change, Political Polarization, and Re-election Hurdles," CER-ETH Economics working paper series 15/222, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

    More about this item

    Keywords

    Dynamic electoral competition; Policy persistence; Policy convergence; Markov perfect equilibrium;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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