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Funding Asymmetries in Electoral Competition: How important is a level playing field?

  • Christoph Vanberg

    (Cornell)

I investigate the idea that campaign spending limits may help to level the playing field in electoral competition between parties who have unequal access to campaign funds. The model assumes that the supporters of one party are on average wealthier than those who support a competing party. Contributions are used to finance advertisements that truthfully reveal information about the quality of candidates. Voters update their beliefs rationally based on information revealed during the campaign. Rational beliefs are shown to compensate for funding asymmetries in equilibrium. As a result, asymmetries in access to funds do not bias the electoral outcome from an ex ante perspective. A limit on campaign expenditures does not affect the relative chances of the two parties, while leading to unintended negative consequences. I conclude that the level playing field argument in support of expenditure limitations is inconsistent with the key assumptions of the analysis and offer some suggestions for future research.

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File URL: http://econwpa.repec.org/eps/pe/papers/0402/0402002.pdf
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Paper provided by EconWPA in its series Public Economics with number 0402002.

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Length: 30 pages
Date of creation: 06 Feb 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0402002
Note: Type of Document - pdf; pages: 30
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Gene Grossman & Elhanan Helpman, 1994. "Electoral Competition and Special Interest Politics," NBER Working Papers 4877, National Bureau of Economic Research, Inc.
  2. Prat, Andrea, 2002. "Campaign Advertising and Voter Welfare," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 999-1017, October.
  3. Stephen Coate, 2001. "Political Competition with Campaign Contributions and Informative Advertising," NBER Working Papers 8693, National Bureau of Economic Research, Inc.
  4. Timothy J. Feddersen & Wolfgang Pesendorfer, 1995. "The Swing Voter's Curse," Discussion Papers 1064, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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