IDEAS home Printed from https://ideas.repec.org/p/rio/texdis/656.html
   My bibliography  Save this paper

Money and Politics: The Effects of Campaign Spending Limits on Political Competition and Incumbency Advantage

Author

Listed:
  • Eric Avis

    (UC Berkeley)

  • Claudio Ferraz

    (Department of Economics, PUC-Rio)

  • Frederico Finan

    (UC Berkeley)

  • Carlos Varjão

    (Stanford)

Abstract

This paper examines the effects of campaign spending limits on political competition and incumbency advantage. We study a reform in Brazil that imposed limits on campaign spending for mayoral elections. These limits were implemented with a discontinuous kink which we exploit for causal identification. We find that stricter limits increase political competition by creating a larger pool of candidates that is on average less wealthy. Moreover, we find that stricter spending limits reduce the incumbency advantage, causing mayors to be less likely to be reelected. These findings are consistent with a contest model with spending caps and endogenous candidate entry.Creation-Date: 2017-06

Suggested Citation

  • Eric Avis & Claudio Ferraz & Frederico Finan & Carlos Varjão, "undated". "Money and Politics: The Effects of Campaign Spending Limits on Political Competition and Incumbency Advantage," Textos para discussão 656, Department of Economics PUC-Rio (Brazil).
    • Handle: RePEc:rio:texdis:656
    as

    Download full text from publisher

    File URL: http://www.econ.puc-rio.br/uploads/adm/trabalhos/files/td656.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tilman Klumpp & Hugo M. Mialon & Michael A. Williams, 2015. "Leveling the Playing Field? The Role of Public Campaign Funding in Elections," American Law and Economics Review, Oxford University Press, vol. 17(2), pages 361-408.
    2. Pastine, Ivan & Pastine, Tuvana, 2012. "Incumbency advantage and political campaign spending limits," Journal of Public Economics, Elsevier, vol. 96(1), pages 20-32.
    3. Kevin Milligan & Marie Rekkas, 2008. "Campaign spending limits, incumbent spending, and election outcomes," Canadian Journal of Economics, Canadian Economics Association, vol. 41(4), pages 1351-1374, November.
    4. Sebastian Calonico & Matias D. Cattaneo & Rocio Titiunik, 2014. "Robust Nonparametric Confidence Intervals for Regression‐Discontinuity Designs," Econometrica, Econometric Society, vol. 82, pages 2295-2326, November.
    5. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 85-114.
    6. Andrea Prat, 2002. "Campaign Advertising and Voter Welfare," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 999-1017.
    7. Cotton, Christopher, 2012. "Pay-to-play politics: Informational lobbying and contribution limits when money buys access," Journal of Public Economics, Elsevier, vol. 96(3), pages 369-386.
    8. Martin J. Osborne & Al Slivinski, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 65-96.
    9. Rohini Pande, 2003. "Can Mandated Political Representation Increase Policy Influence for Disadvantaged Minorities? Theory and Evidence from India," American Economic Review, American Economic Association, vol. 93(4), pages 1132-1151, September.
    10. Richard Cornes & Roger Hartley, 2005. "Asymmetric contests with general technologies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 923-946, November.
    11. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-651, June.
    12. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
    13. Stein, William E, 2002. "Asymmetric Rent-Seeking with More Than Two Contestants," Public Choice, Springer, vol. 113(3-4), pages 325-336, December.
    14. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Schwartz, 2013. "Effort maximization in asymmetric contest games with heterogeneous contestants," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 589-630, March.
    15. Bernardo S. Da Silveira & João M. P. De Mello, 2011. "Campaign Advertising and Election Outcomes: Quasi-natural Experiment Evidence from Gubernatorial Elections in Brazil," Review of Economic Studies, Oxford University Press, vol. 78(2), pages 590-612.
    16. Gerber, Alan, 1998. "Estimating the Effect of Campaign Spending on Senate Election Outcomes Using Instrumental Variables," American Political Science Review, Cambridge University Press, vol. 92(2), pages 401-411, June.
    17. Raghabendra Chattopadhyay & Esther Duflo, 2004. "Women as Policy Makers: Evidence from a Randomized Policy Experiment in India," Econometrica, Econometric Society, vol. 72(5), pages 1409-1443, September.
    18. Thomas Stratmann & Francisco J. & Aparicio-Castillo, 2006. "Competition policy for elections: Do campaign contribution limits matter?," Public Choice, Springer, vol. 127(1), pages 177-206, April.
    19. Fang, Hanming, 2002. "Lottery versus All-Pay Auction Models of Lobbying," Public Choice, Springer, vol. 112(3-4), pages 351-371, September.
    20. Levitt, Steven D, 1994. "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 777-798, August.
    21. Erikson, Robert S. & Palfrey, Thomas R., 2000. "Equilibria in Campaign Spending Games: Theory and Data," American Political Science Review, Cambridge University Press, vol. 94(3), pages 595-609, September.
    22. 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.
    23. David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
    24. Claudio Ferraz & Frederico Finan, 2011. "Electoral Accountability and Corruption: Evidence from the Audits of Local Governments," American Economic Review, American Economic Association, vol. 101(4), pages 1274-1311, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Monica Martinez-Bravo & Leonard Wantchekon, 2021. "Political Economy and Structural Transformation: Democracy, Regulation and Public Investment," Working Papers wp2021_2110, CEMFI.
    2. Bekkouche, Yasmine & Cagé, Julia & Dewitte, Edgard, 2022. "The heterogeneous price of a vote: Evidence from multiparty systems, 1993–2017," Journal of Public Economics, Elsevier, vol. 206(C).
    3. Yasmine Bekkouche & Julia Cage, 2018. "The Price of a Vote: Evidence from France, 1993-2014," Working Papers Series 68, Institute for New Economic Thinking.
    4. Griffith, Alan & Noonen, Thomas, 2021. "Does Public Campaign Funding Crowd Out Private Donation Activity? Evidence from Seattle's Democracy Voucher Program," SocArXiv 9wtzs, Center for Open Science.
    5. Bekkouche, Yasmine & Cagé, Julia & Dewitte, Edgard, 2022. "The heterogeneous price of a vote: Evidence from multiparty systems, 1993–2017," Journal of Public Economics, Elsevier, vol. 206(C).
    6. Julia Cage & Edgard Dewitte, 2021. "It Takes Money to Make MPs: Evidence from 150 Years of British Campaign Spending," Sciences Po publications 2021-08, Sciences Po.
    7. Yasmine Bekkouche & Julia Cage, 2019. "The Heterogeneous Price of a Vote: Evidence from France, 1993-2014," Working Papers hal-03393084, HAL.
    8. Pinar Yildirim & Andrei Simonov & Maria Petrova & Ricardo Perez-Truglia, 2020. "Are Political and Charitable Giving Substitutes? Evidence from the United States," NBER Working Papers 26616, National Bureau of Economic Research, Inc.
    9. Yangguang Huang & Ming He, 2021. "Structural Analysis Of Tullock Contests With An Application To U.S. House Of Representatives Elections," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1011-1054, August.
    10. Song, B.K., 2020. "The effect of public financing on candidate reemergence and success in elections," European Journal of Political Economy, Elsevier, vol. 65(C).
    11. Gisléia Benini Duarte & André de Souza Melo & Diego Firmino Costa da Silva, 2019. "Do government audits reduce dengue? Estimating the impact of federal monitoring lotteries program on dengue incidence," International Journal of Health Economics and Management, Springer, vol. 19(3), pages 359-369, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laurent Bouton & Micael Castanheira & Allan Drazen, 2018. "A Theory of Small Campaign Contributions," NBER Working Papers 24413, National Bureau of Economic Research, Inc.
    2. Rubén Poblete Cazenave, 2021. "Reputation Shocks and Strategic Responses in Electoral Campaigns," Tinbergen Institute Discussion Papers 21-049/V, Tinbergen Institute.
    3. Bruno Carvalho, 2021. "Campaign Spending in Local Elections: the Effects of Public Funding," Working Papers ECARES 2021-30, ULB -- Universite Libre de Bruxelles.
    4. Thomas Bassetti & Filippo Pavesi, 2017. "Electoral Contributions And The Cost Of Unpopularity," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1771-1791, October.
    5. Matthew T. Cole & Ivan Pastine & Tuvana Pastine, 2018. "Incumbency Advantage in an Electoral Contest," The Economic and Social Review, Economic and Social Studies, vol. 49(4), pages 419-436.
    6. Ujhelyi, Gergely, 2009. "Campaign finance regulation with competing interest groups," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 373-391, April.
    7. Thomas Stratmann, 2003. "Tainted Money? Contribution Limits and the Effectiveness of Campaign Spending," CESifo Working Paper Series 1044, CESifo.
    8. Prato, Carlo & Wolton, Stephane, 2014. "Electoral Imbalances and their Consequences," MPRA Paper 68650, University Library of Munich, Germany, revised 26 Nov 2015.
    9. Bagues, Manuel & Campa, Pamela, 2021. "Can gender quotas in candidate lists empower women? Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 194(C).
    10. Boyer, Pierre C. & Konrad, Kai A. & Roberson, Brian, 2017. "Targeted campaign competition, loyal voters, and supermajorities," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 49-62.
    11. Subhasish M. Chowdhury & Patricia Esteve-González & Anwesha Mukherjee, 2020. "Heterogeneity, Leveling the Playing Field, and Affirmative Action in Contests," Economics Series Working Papers 915, University of Oxford, Department of Economics.
    12. Bekkouche, Yasmine & Cagé, Julia & Dewitte, Edgard, 2022. "The heterogeneous price of a vote: Evidence from multiparty systems, 1993–2017," Journal of Public Economics, Elsevier, vol. 206(C).
    13. Yosef Mealem & Shmuel Nitzan, 2014. "Equity and effectiveness of optimal taxation in contests under an all-pay auction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 437-464, February.
    14. Bekkouche, Yasmine & Cagé, Julia & Dewitte, Edgard, 2022. "The heterogeneous price of a vote: Evidence from multiparty systems, 1993–2017," Journal of Public Economics, Elsevier, vol. 206(C).
    15. Yasmine Bekkouche & Julia Cage, 2019. "The Heterogeneous Price of a Vote: Evidence from France, 1993-2014," Working Papers hal-03393084, HAL.
    16. Eoin McGuirk & Nathaniel Hilger & Nicholas Miller, 2017. "No Kin In The Game: Moral Hazard and War in the U.S. Congress," NBER Working Papers 23904, National Bureau of Economic Research, Inc.
    17. Ruben Durante & Emilio Gutierrez, 2014. "Political Advertising and Voting Intention: Evidence from Exogenous Variation in Ads Viewership," Sciences Po publications info:hdl:2441/26lctatf2u8, Sciences Po.
    18. Jan Brueckner & Kangoh Lee, 2015. "Negative campaigning in a probabilistic voting model," Public Choice, Springer, vol. 164(3), pages 379-399, September.
    19. Pastine, Ivan & Pastine, Tuvana, 2012. "Incumbency advantage and political campaign spending limits," Journal of Public Economics, Elsevier, vol. 96(1), pages 20-32.
    20. Yosef Mealem & Shmuel Nitzan, 2016. "Discrimination in contests: a survey," Review of Economic Design, Springer;Society for Economic Design, vol. 20(2), pages 145-172, June.

    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rio:texdis:656. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dpucrbr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/dpucrbr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.