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Two-candidate competition with endogenous valence: a differential game approach

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  • Köppl Turyna, Monika

Abstract

We propose a differential game approach to analyze two--candidate competition in a la Hotelling game with candidates simultaneously choosing locations and investment in valence. We find a Markov perfect equilibrium in which candidates choose divergent locations. Divergence from the median is increasing if the parameter measuring the importance of policy relative to valence is decreasing and if valence depreciates slowly. The results are generalizable to a version of the game with probabilistic voting, that is with a stochastic state equation.

Suggested Citation

  • Köppl Turyna, Monika, 2014. "Two-candidate competition with endogenous valence: a differential game approach," MPRA Paper 64203, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:64203
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    References listed on IDEAS

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    Keywords

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    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

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