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Political Competition in Government Formation: the Effect of Simultaneous Policy Bidding on the Political Outcome

Listed author(s):
  • Birol Baskan

    (Northwestern University)

  • Federico Boffa

    (Northwestern University)

We present an alternative model of government formation in which two parties simultaneously and inpendently announce their polices proposals through a take-it-or-leave-it offer, to a third party - the formateur -, which picks the one that maximizes its own utility. As a consequence, the chosen policy proposal is implemented by a government coalition composed of the formateur and the party associated with the selected policy proposal. The model purposedly captures the political competition arising among the parties other than the formateur for the partnership in the governing coalition. The political equilibria resulting from the model confirm that the intensification of political competition among the parties, implied by the present framework, is beneficial for the formateur.

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Paper provided by EconWPA in its series Microeconomics with number 0402003.

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Length: 15 pages
Date of creation: 04 Feb 2004
Handle: RePEc:wpa:wuwpmi:0402003
Note: Type of Document - pdf; prepared on winXP; pages: 15. Preliminary
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