Extreme parties and political rents
We study the rent-seeking behaviour of political parties in a proportional representation system, where the final policy choice of the parliament is a weighted average of parties' policy positions, weights being their vote shares. We find that parties' policy preferences and their rent levels are strongly linked. Our main result is that an extreme party chooses a higher rent level than a moderate party, except in some cases of unlikely distributions of parties. An extreme party has more policy influence than a moderate party since it pulls the final policy towards its position more than a moderate party. Hence, a voter is ready to pay more rents to an extreme party in exchange of a greater policy influence. Furthermore, note that the voter does not need to be an extremist to vote for an extreme party. She is acting strategically in order to influence the final policy in her advantage as much as possible. In turn, this strategic behaviour of voters allow more extreme parties to earn higher rent levels.
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