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Public Funding of Political Parties

Author

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  • Christian Schultz
  • Ignacio Ortuno-OrtÍn

Abstract

This paper concerns public funding of parties. Parteis receive public funds depending on their vote share. Funds finance electoral campaigns. Two cases are investigated. In the first, some voters are policy motivated and some are ?impressionable? ? their vote depends directly on campaign expenditures. In the second, campaigning is informative and all voters are policy motivated. Public funds increase policy convergence in both cases. The effect is larger, the more funding depends on vote shares. When campaigns are informative, there may be multiple euqilibria. Intuitively, a large party can stay large since it receives large funds.

Suggested Citation

  • Christian Schultz & Ignacio Ortuno-OrtÍn, 2000. "Public Funding of Political Parties," CESifo Working Paper Series 368, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_368
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    References listed on IDEAS

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    1. Ignacio OrtuÓo-OrtÎn, 1997. "A spatial model of political competition and proportional representation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 14(3), pages 427-438.
    2. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659 Elsevier.
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    6. Mueller, Dennis C & Stratmann, Thomas, 1994. "Informative and Persuasive Campaigning," Public Choice, Springer, vol. 81(1-2), pages 55-77, October.
    7. repec:cup:apsrev:v:88:y:1994:i:01:p:33-47_09 is not listed on IDEAS
    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. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 265-286.
    10. Rebecca Morton & Charles Cameron, 1992. "Elections And The Theory Of Campaign Contributions: A Survey And Critical Analysis," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 79-108, March.
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    12. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
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    Citations

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    Cited by:

    1. Jenny De Freitas, 2011. "Political Support for a Private System of Financing Political Campaigns," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(4), pages 352-377, December.
    2. Hans Gersbach, 2014. "Campaigns, political mobility, and communication," Public Choice, Springer, vol. 161(1), pages 31-49, October.
    3. Amihai Glazer & Mark Gradstein, 2005. "Elections with contribution-maximizing candidates," Public Choice, Springer, vol. 122(3), pages 467-482, March.
    4. 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.
    5. Jenny De Freitas, 2009. "Political support for the private system to finance political parties," DEA Working Papers 35, Universitat de les Illes Balears, Departament d'Economía Aplicada.
    6. Hans Gersbach, 2014. "Government Debt-Threshold Contracts," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 444-458, January.
    7. Köppl-Turyna, Monika, 2017. "Public funding of parties and political polarization," Working Papers 03, Agenda Austria.
    8. Westermark, Andreas, 2004. "Extremism, campaigning and ambiguity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 421-452, May.
    9. 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.
    10. Christian Schultz, 2007. "Strategic Campaigns and Redistributive Politics," Economic Journal, Royal Economic Society, vol. 117(522), pages 936-963, July.
    11. Gersbach, Hans & Schneider, Maik T., 2012. "Tax contracts and elections," European Economic Review, Elsevier, vol. 56(7), pages 1461-1479.
    12. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
    13. Köppl Turyna, Monika, 2015. "How asymmetric funding of parties can lead to political polarization," MPRA Paper 64200, University Library of Munich, Germany.
    14. Ossokina, Ioulia V. & Swank, Otto H., 2004. "The optimal degree of polarization," European Journal of Political Economy, Elsevier, vol. 20(1), pages 255-262, March.
    15. Thomas Stratmann, 2003. "Tainted Money? Contribution Limits and the Effectiveness of Campaign Spending," CESifo Working Paper Series 1044, CESifo Group Munich.
    16. Westermark, Andreas, 2001. "Campaigning and Ambiguity when Parties Cannot Make Credible Election Promises," Working Paper Series 568, Research Institute of Industrial Economics.
    17. Troumpounis, Orestis, 2012. "On the distribution of public funding to political parties," Economics Letters, Elsevier, vol. 116(3), pages 367-370.
    18. 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.

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