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A Theory of Small Campaign Contributions

Author

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  • Laurent Bouton
  • Micael Castanheira De Moura
  • Allan Drazen

Abstract

We propose a theory of small campaign contributions driven by an electoral motive, i.e. the desire to influence election outcomes. Though small donors take as given the actions of others, strategic interactions induce patterns consistent with empirical findings, e.g. election closeness and underdog effects. We also study different forms of campaign finance laws, and show why caps should be combined with a progressive tax on contributions. Next, we introduce large donors and show how several conclusions in the literature may be modified by the interaction with small donors. Throughout, we discuss the empirical implications of our findings.

Suggested Citation

  • Laurent Bouton & Micael Castanheira De Moura & Allan Drazen, 2020. "A Theory of Small Campaign Contributions," Working Papers ECARES 2020-43, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/313224
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    References listed on IDEAS

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    Cited by:

    1. Maria Petrova & Ricardo Perez-Truglia & Andrei Simonov & Pinar Yildirim, 2020. "Are Political and Charitable Giving Substitutes? Evidence from the United States," NBER Working Papers 26616, National Bureau of Economic Research, Inc.
    2. Yasmine Bekkouche & Julia Cage & Edgard Dewitte, 2020. "The Heterogeneous Price of a Vote: Evidence from Multiparty Systems, 1993-2017," Sciences Po publications 2020-07, Sciences Po.
    3. Denter, Philipp, 2020. "Campaign contests," European Economic Review, Elsevier, vol. 127(C).
    4. Bernhardt, Dan & Ghosh, Meenakshi, 2020. "Positive and negative campaigning in primary and general elections," Games and Economic Behavior, Elsevier, vol. 119(C), pages 98-104.
    5. Yasmine Bekkouche & Julia Cage, 2019. "The Heterogeneous Price of a Vote: Evidence from France, 1993-2014," Sciences Po publications 2019-09, Sciences Po.
    6. Avidit Acharya & Edoardo Grillo & Takuo Sugaya & Eray Turkel, 2019. "Dynamic Campaign Spending," Carlo Alberto Notebooks 601, Collegio Carlo Alberto.

    More about this item

    Keywords

    Campaign contributions; Small donors; Campaign finance laws; Elections; Income inequality;

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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