Party Governance and Political Competition with an Application to the American Direct Primacy

We analyse how the governance structure of political parties influences electoral competition. Parties choose their organization to manipulate the incentives of politicians to provide effort. We show that intra- and inter-party competition interact to shape these incentives. We also get new insights on the role of information, polarization, and on the value of rents from office. More extreme parties tend to prefer less democratic governance structures. Instead, democratic structures are preferred when voters are ill informed about the candidates? performance and when the rents from office are low. We use our theory to interpret the introduction of the Direct Primary system in the USA at the beginning of the 20th century.