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Competition policy for elections: Do campaign contribution limits matter?


  • Thomas Stratmann
  • Francisco J.
  • Aparicio-Castillo



This paper examines whether campaign contribution restrictions have consequences for election outcomes. States are a natural laboratory to examine this issue. We analyze elections to Assemblies from 1980 to 2001 and determine whether candidates' vote shares are altered by changes in state campaign contribution restrictions. We find that limits on giving narrow the margin of victory of the winning candidate. Limits lead to closer elections for future incumbents, but have less effect on the margin of victory of incumbents who passed the campaign finance legislation. We also find some evidence that contribution limits increase the number of candidates in the race. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Thomas Stratmann & Francisco J. & Aparicio-Castillo, 2006. "Competition policy for elections: Do campaign contribution limits matter?," Public Choice, Springer, vol. 127(1), pages 177-206, April.
  • Handle: RePEc:kap:pubcho:v:127:y:2006:i:1:p:177-206
    DOI: 10.1007/s11127-006-1252-x

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    References listed on IDEAS

    1. Kroszner, Randall S & Stratmann, Thomas, 1998. "Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services' Political Action Committees," American Economic Review, American Economic Association, vol. 88(5), pages 1163-1187, December.
    2. Potters, Jan & Sloof, Randolph & van Winden, Frans, 1997. "Campaign expenditures, contributions and direct endorsements: The strategic use of information and money to influence voter behavior," European Journal of Political Economy, Elsevier, vol. 13(1), pages 1-31, February.
    3. Mueller, Dennis C & Stratmann, Thomas, 1994. "Informative and Persuasive Campaigning," Public Choice, Springer, vol. 81(1-2), pages 55-77, October.
    4. Grier, Kevin B & Munger, Michael C, 1991. "Committee Assignments, Constituent Preferences, and Campaign Contributions," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 24-43, January.
    5. Jeffrey Milyo, 1997. "The economics of political campaign finance: FECA and the puzzle of the not very greedy grandfathers," Public Choice, Springer, vol. 93(3), pages 245-270, December.
    6. Angrist, Joshua D., 1991. "Grouped-data estimation and testing in simple labor-supply models," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 243-266, February.
    7. Stratmann, Thomas, 1995. "Campaign Contributions and Congressional Voting: Does the Timing of Contributions Matter?," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 127-136, February.
    8. Ignacio Ortuno-Ortin & 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.
    9. Prat, Andrea, 2002. "Campaign Spending with Office-Seeking Politicians, Rational Voters, and Multiple Lobbies," Journal of Economic Theory, Elsevier, vol. 103(1), pages 162-189, March.
    10. Milyo, Jeffrey & Groseclose, Timothy, 1999. "The Electoral Effects of Incumbent Wealth," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 699-722, October.
    11. Stephen Coate, 2004. "Political Competition with Campaign Contributions and Informative Advertising," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 772-804, September.
    12. Snyder, James M, Jr, 1992. "Long-Term Investing in Politicians; or, Give Early, Give Often," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 15-43, April.
    13. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
    14. Stratmann, Thomas, 1998. "The Market for Congressional Votes: Is Timing of Contributions Everything?," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 85-113, April.
    15. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
    16. Stratmann, Thomas, 1992. "Are Contributions Rational? Untangling Strategies of Political Action Committees," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 647-664, June.
    17. repec:cup:apsrev:v:72:y:1978:i:02:p:469-491_15 is not listed on IDEAS
    18. Bronars, Stephen G & Lott, John R, Jr, 1997. "Do Campaign Donations Alter How a Politician Votes? Or, Do Donors Support Candidates Who Value the Same Things That They Do?," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 317-350, October.
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    Cited by:

    1. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
    2. Eric Avis & Claudio Ferraz & Frederico Finan & Carlos Varjão, "undated". "Money and Politics: The Effects of Campaign Spending Limits on Political Competition and Incumbency Advantage," Textos para discussão 656, Department of Economics PUC-Rio (Brazil).
    3. John Lott, 2006. "Campaign finance reform and electoral competition," Public Choice, Springer, vol. 129(3), pages 263-300, December.
    4. Köppl-Turyna, Monika, 2014. "Campaign finance regulations and policy convergence: The role of interest groups and valence," European Journal of Political Economy, Elsevier, vol. 33(C), pages 1-19.
    5. Jeffrey Milyo, 2013. "Campaign Spending and Electoral Competition: Towards More Policy Relevant Research," Working Papers 1344, Department of Economics, University of Missouri.
    6. repec:ces:ifodic:v:1:y:2003:i:1:p:14567829 is not listed on IDEAS
    7. Thomas Stratmann, 2006. "Contribution limits and the effectiveness of campaign spending," Public Choice, Springer, vol. 129(3), pages 461-474, December.
    8. Martial Foucault & Abel François, 2005. "Le rendement des dépenses électorales en France," Post-Print hal-00126910, HAL.
    9. Ivan Pastine & Tuvana Pastine, 2009. "Caps on political contributions, monetary penalties and politician preferences," Working Papers 200912, School of Economics, University College Dublin.
    10. repec:oup:jcomle:v:4:y:2008:i:4:p:1065-1096. is not listed on IDEAS
    11. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
    12. Ujhelyi, Gergely, 2009. "Campaign finance regulation with competing interest groups," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 373-391, April.
    13. Panova Elena, 2011. "Electoral Endorsements and Campaign Contributions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-25, February.
    14. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
    15. John Maloney & Andrew Pickering, 2013. "Political Competition, Political Donations, Economic Policy and Growth," Discussion Papers 13/21, Department of Economics, University of York.
    16. Thomas Stratmann, 2003. "Tainted Money? Contribution Limits and the Effectiveness of Campaign Spending," CESifo Working Paper Series 1044, CESifo Group Munich.
    17. Elena Panova, 2007. "Congruence Among Voters and Contributions to Political Campaigns," Cahiers de recherche 0722, CIRPEE.
    18. Tim Wegenast, 2010. "Uninformed Voters for Sale: Electoral Competition, Information and Interest Groups in the US," Kyklos, Wiley Blackwell, vol. 63(2), pages 271-300, May.
    19. Jürgen Huber & Michael Kirchler, 2013. "Corporate campaign contributions and abnormal stock returns after presidential elections," Public Choice, Springer, vol. 156(1), pages 285-307, July.
    20. Jeffrey Milyo & David M. Primo, 2005. "Campaign Finance Laws and Political Efficacy: Evidence From the States," Working Papers 0513, Department of Economics, University of Missouri.
    21. Tilman Klumpp & Hugo M. Mialon & Michael A. Williams, 2016. "The Business of American Democracy: Citizens United, Independent Spending, and Elections," Journal of Law and Economics, University of Chicago Press, vol. 59(1), pages 1-43.
    22. Drazen, Allan & Limao, Nuno & Stratmann, Thomas, 2007. "Political contribution caps and lobby formation: Theory and evidence," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 723-754, April.
    23. Ivan Pastine & Tuvana Pastine, 2010. "Politician preferences, law-abiding lobbyists and caps on political contributions," Public Choice, Springer, vol. 145(1), pages 81-101, October.
    24. Klumpp, Tilman & Mialon, Hugo & Williams, Michael, 2012. "Money Talks: The Impact of Citizens United on State Elections," Working Papers 2012-18, University of Alberta, Department of Economics, revised 01 Sep 2012.

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