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Political Competitiveness

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  • Casey B. Mulligan
  • Kevin K. Tsui

Abstract

Political competitiveness - which many interpret as the degree of democracy - can be modeled as a monopolistic competition. All regimes are constrained by the threat of "entry," and thereby seek some combination of popular support and political entry barriers. This simple model predicts that many public policies are unrelated to political competitiveness, and that even unchallenged nondemocratic regimes should tax far short of their Laffer curve maximum. Economic sanctions, odious debt repudiation, and other policies designed to punish dictators can have the unintended consequences of increasing oppression and discouraging competition. Since entry barriers are a form of increasing returns, democratic countries (defined according to low entry barriers) are more likely to subdivide and nondemocratic countries are more likely to merge. These and other predictions are consistent with previous empirical findings on comparative public finance, election contests, international conflict, the size of nations, and the Lipset hypothesis. As in the private sector, the number of competitors is not necessarily a good indicator of public sector competitiveness.

Suggested Citation

  • Casey B. Mulligan & Kevin K. Tsui, 2006. "Political Competitiveness," NBER Working Papers 12653, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12653
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    File URL: http://www.nber.org/papers/w12653.pdf
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    Cited by:

    1. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    2. Berdegué, J. & Carriazo, F. & Jara, B. & Modrego, F. & Soloaga, I., 2012. "Ciudades, territorios y crecimiento inclusivo en Latinoamérica: Los casos de Chile, Colombia y México," Working papers 118, Rimisp Latin American Center for Rural Development.
    3. Alfano, Maria Rosaria & Baraldi, Anna Laura & Cantabene, Claudia, 2013. "The role of political competition in the link between electoral systems and corruption: The Italian case," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 1-10.
    4. M. Alfano & A. Baraldi, 2015. "Is there an optimal level of political competition in terms of economic growth? Evidence from Italy," European Journal of Law and Economics, Springer, vol. 39(2), pages 263-285, April.
    5. Mulligan, Casey B. & Tsui, Kevin K., 2015. "Political entry, public policies, and the economy," Research in Economics, Elsevier, vol. 69(3), pages 377-397.
    6. Donna Driscoll & Dennis Halcoussis & Anton D. Lowenberg, 2011. "Economic Sanctions And Culture," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(4), pages 423-448, August.
    7. Man, Georg, 2014. "Political competition and economic growth: A nonlinear relationship?," European Journal of Political Economy, Elsevier, vol. 36(C), pages 287-302.
    8. Berdegué, Julio A. & Carriazo, Fernando & Jara, Benjamín & Modrego, Félix & Soloaga, Isidro, 2015. "Cities, Territories, and Inclusive Growth: Unraveling Urban–Rural Linkages in Chile, Colombia, and Mexico," World Development, Elsevier, vol. 73(C), pages 56-71.

    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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