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Social Ideology and Taxes in a Differentiated Candidates Framework

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  • Stefan Krasa
  • Mattias Polborn

Abstract

How does ideological polarization on non-economic matters influence the size of government? We analyze this question using a differentiated candidates framework: Two office-motivated candidates differ in their (fixed) ideological position and their production function for public goods, and choose which tax rate to propose. We provide conditions under which a unique equilibrium exists. In equilibrium, candidates propose different tax rates, and the extent of economic differentiation is influenced by the distribution and intensity of non-economic preferences in the electorate. In turn, the extent of economic differentiation influences whether parties divide the electorate primarily along economic or social lines.

Suggested Citation

  • Stefan Krasa & Mattias Polborn, 2011. "Social Ideology and Taxes in a Differentiated Candidates Framework," CESifo Working Paper Series 3503, CESifo.
    • Handle: RePEc:ces:ceswps:_3503
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    References listed on IDEAS

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    More about this item

    Keywords

    differentiated candidates; policy divergence; ideology;
    All these keywords.

    JEL classification:

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

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