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
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More about this item
KeywordsPolitical Economy; Parties; Public Funding; Informative Advertising; Campaign Finance;
- 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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