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Two-Party Competition with Persistent Policies

  • Jean Guillaume Forand

    (Department of Economics, University of Waterloo)

This paper studies the Markov perfect equilibrium outcomes of a dynamic game of electoral competition between two policy-motivated parties. I model incumbent policy persistence: parties commit to implement a policy for their full tenure in office, and hence in any election only the opposition party renews its platform. In equilibrium, parties alternate in power and policies converge to symmetric alternations about the median voter's ideal policy. Parties' disutility from opponents' policies leads to alterna- tions that display bounded extremism; alternations far from the median are never limits of equilibrium dynamics. Under a natural restriction on strategies, I find that robust long-run outcomes display bounded moderation; alternations close to the median are reached in equilibrium only if policy dynamics start there. I show that these results are robust to voters being forward-looking, the introduction of term limits, costly policy adjustments for incumbents, and office benefits.

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File URL: http://economics.uwaterloo.ca/documents/10-011JGF.pdf
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Paper provided by University of Waterloo, Department of Economics in its series Working Papers with number 1011.

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Length: 65 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
Handle: RePEc:wat:wpaper:1011
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