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Public funding of political parties when campaigns are informative Abstract: The paper considers public funding of political parties when some voters are poorly informed about parties? candidates and campaigns are informative. For symmetric equilibria, it is shown that more public funding leads parties to chose more moderate candidates, and that an increase in the funding's dependence on vote shares induces further moderation and improves welfare. If parties are asymmetric, vote share dependent public funding bene?ts the large party and makes it moderate its candidate, while the smaller party reacts by choosing a more extremist candidate. On balance, however, if the parties are not too asymmetric, an increase in vote share dependent funding improves welfare and increases the likelihood that a moderate candidate wins the election

Author

Listed:
  • Ignacio Ortuño Ortín

    (Department of Economics, University Carlos III)

  • Christian Schultz

    (Department of Economics, University og Copenhagen)

Abstract

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Suggested Citation

  • Ignacio Ortuño Ortín & Christian Schultz, 2012. "Public funding of political parties when campaigns are informative Abstract: The paper considers public funding of political parties when some voters are poorly informed about parties? candidates and ," EPRU Working Paper Series 2012-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:12-05
    as

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    File URL: http://web.econ.ku.dk/eprn_epru/Workings_Papers/WP-12-05.pdf
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    References listed on IDEAS

    as
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    4. Roemer John E, 2006. "Party Competition under Private and Public Financing: A Comparison of Institutions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-31, April.
    5. Ashworth, Scott, 2006. "Campaign Finance and Voter Welfare with Entrenched Incumbents," American Political Science Review, Cambridge University Press, vol. 100(1), pages 55-68, February.
    6. Gelman, Andrew & King, Gary, 1993. "Why Are American Presidential Election Campaign Polls So Variable When Votes Are So Predictable?," British Journal of Political Science, Cambridge University Press, vol. 23(4), pages 409-451, October.
    7. Troumpounis, Orestis, 2012. "On the distribution of public funding to political parties," Economics Letters, Elsevier, vol. 116(3), pages 367-370.
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    More about this item

    Keywords

    Political Economy; Parties; Public Funding; Informative Advertising; Campaign Finance;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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