IDEAS home Printed from
   My bibliography  Save this article

The economics of campaign funds


  • William Welch


We have sketched a theory of campaign funds. Some funds are supplied by contributors on aquid pro quo basis in exchange for political influence. This supply of funds is actually the demand for influence and is determined by their VMP, which is affected by government discretionary power, by probability of receiving the desired influence, and by the concentration of the beneficiaries. Another supply of funds is actually the demand for “righteousness” and is determined by the MP of a campaign dollar in electing candidates with the desired stands. The demand for funds by politicians is determined by their marginal product in terms of votes. The theory, furthermore, predicts that campaigns will spend themselves into debt because of the fixed-pie nature of the production function. Owing to limited space, only data on the production function was analyzed. Specification for the 1972 Congressional data included as independent variables expenditures of both parties, incumbency variables, and the Nixon vote in 1968. The Republican vote percentage was the dependent variable. This specification explained two-thirds of the variance in the Senate races and four-fifths in the House races. The MP schedule of expenditures was found to slope sharply downward, which constitutes a major argument for public financing of campaigns. Copyright Center for Study of Public Choice Virginia Polytechnic Institute 1974

Suggested Citation

  • William Welch, 1974. "The economics of campaign funds," Public Choice, Springer, vol. 20(1), pages 83-97, December.
  • Handle: RePEc:kap:pubcho:v:20:y:1974:i:1:p:83-97
    DOI: 10.1007/BF01718179

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. repec:cup:apsrev:v:67:y:1973:i:04:p:1213-1234_14 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Peter Aranson & Melvin Hinich, 1979. "Some aspects of the political economy of election campaign contribution laws," Public Choice, Springer, vol. 34(3), pages 435-461, September.
    2. Michael Ensley, 2009. "Individual campaign contributions and candidate ideology," Public Choice, Springer, vol. 138(1), pages 221-238, January.
    3. repec:bla:kyklos:v:70:y:2017:i:2:p:220-255 is not listed on IDEAS
    4. David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
    5. repec:kap:copoec:v:30:y:2019:i:1:d:10.1007_s10602-018-9269-y is not listed on IDEAS
    6. Jordan Rappaport, 1997. "Extremist Funding, Centrist Voters, and Candidate Divergence," Research in Economics 97-06-059e, Santa Fe Institute.
    7. Michael Munger, 1989. "A simple test of the thesis that committee jurisdictions shape corporate PAC contributions," Public Choice, Springer, vol. 62(2), pages 181-186, August.
    8. Michael Dorsch, 2013. "Bailout for sale? The vote to save Wall Street," Public Choice, Springer, vol. 155(3), pages 211-228, June.
    9. repec:bla:ecinqu:v:56:y:2018:i:4:p:2116-2136 is not listed on IDEAS
    10. Florian Neumeier, 2018. "Do Businessmen Make Good Governors?," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 2116-2136, October.
    11. repec:gam:jecomi:v:7:y:2019:i:1:p:16-:d:209812 is not listed on IDEAS
    12. Russell Pittman, 1988. "Rent-seeking and market structure: Comment," Public Choice, Springer, vol. 58(2), pages 173-185, August.
    13. Dennis Coates, 1998. "Additional incumbent spending really can harm (at least some) incumbents: An analysis of vote share maximization," Public Choice, Springer, vol. 95(1), pages 63-87, April.
    14. Susan A. Edelman, 1992. "Two Politicians, A Pac, And How They Interact: Two Extensive Form Games," Economics and Politics, Wiley Blackwell, vol. 4(3), pages 289-306, November.
    15. Stuart Nagel, 1981. "Optimally allocating campaign expenditures," Public Choice, Springer, vol. 36(1), pages 159-164, January.
    16. Henry Chappell, 1981. "Campaign contributions and voting on the cargo preference bill: A comparison of simultaneous models," Public Choice, Springer, vol. 36(2), pages 301-312, January.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:20:y:1974:i:1:p:83-97. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.