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Two-Party Competition with Persistent Policies

Author

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  • Jean Guillaume Forand

    (Department of Economics, University of Waterloo)

Abstract

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.

Suggested Citation

  • Jean Guillaume Forand, 2010. "Two-Party Competition with Persistent Policies," Working Papers 1011, University of Waterloo, Department of Economics, revised Nov 2010.
  • Handle: RePEc:wat:wpaper:1011
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    References listed on IDEAS

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    Cited by:

    1. Hans Gersbach & Philippe Muller & Oriol Tejada, 2017. "A Dynamic Model of Electoral Competition with Costly Policy Changes," CER-ETH Economics working paper series 17/270, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. Jean Guillaume Forand & John Duggan, 2013. "Markovian Elections," Working Papers 1305, University of Waterloo, Department of Economics, revised Oct 2013.
    3. Gersbach, Hans & Muller, Philippe & Tejada, Oriol, 2016. "The Effects of Higher Re-election Hurdles and Costs of Policy Change on Political Polarization," CEPR Discussion Papers 11375, C.E.P.R. Discussion Papers.
    4. Vincent Anesi, 2012. "A new old solution for weak tournaments," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 919-930, October.
    5. Bowen, T. Renee & Chen, Ying & Eraslan, Hülya & Zápal, Jan, 2017. "Efficiency of flexible budgetary institutions," Journal of Economic Theory, Elsevier, vol. 167(C), pages 148-176.
    6. César Martinelli & John Duggan, 2014. "The Political Economy of Dynamic Elections: A Survey and Some New Results," Working Papers 1403, Centro de Investigacion Economica, ITAM.
    7. Zapal, Jan, 2016. "Markovian equilibria in dynamic spatial legislative bargaining: Existence with three players," Games and Economic Behavior, Elsevier, vol. 98(C), pages 235-242.
    8. Jan Zapal, 2014. "Simple Markovian Equilibria in Dynamic Spatial Legislative Bargaining," CERGE-EI Working Papers wp515, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Tasos Kalandrakis, 2016. "Pareto efficiency in the dynamic one-dimensional bargaining model," Journal of Theoretical Politics, , vol. 28(4), pages 525-536, October.
    10. Hans Gersbach & Philippe Muller & Oriol Tejada, 2015. "Costs of Change, Political Polarization, and Re-election Hurdles," CER-ETH Economics working paper series 15/222, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • 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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