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Campaign Advertising and Voter Welfare

  • Andrea Prat

This paper investigates the role of campaign advertising and the opportunity of legal restrictions on it. An electoral race is modelled as a signalling game with three classes of players: many voters, two candidates, and one interest group. The group has non-verifiable insider information on the candidates' quality and, on the basis of this information, offers a contribution to each candidate in exchange for a favourable policy position. Candidates spend the contributions they receive on non-directly informative advertising. This paper shows that: (1) a separating equilibrium exists in which the group contributes to a candidate only if the insider information about that candidate is positive; (2) although voters are fully rational, a ban on campaign advertising can be welfare-improving; and (3) split contributions may arise in equilibrium (and, if they arise too often, they are detrimental to voters). Copyright 2002, Wiley-Blackwell.

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Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 69 (2002)
Issue (Month): 4 ()
Pages: 999-1017

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Handle: RePEc:oup:restud:v:69:y:2002:i:4:p:999-1017
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