Public funding of political parties when campaigns are informative

Ignacio Ortuño  Ortín; Christian Schultz

Public funding of political parties when campaigns are informative

Ignacio Ortuño Ortín, Christian Schultz

Department of Economics

Abstract

The paper considers public funding of political parties when some
voters are poorly informed about parties’ candidates and campaigns
are informative. For symmetric equilibria, it is shown that more pub-
lic funding leads parties to chose more moderate candidates, and that
an increase in the funding’s dependence on vote shares induces fur-
ther moderation and improves welfare. If parties are asymmetric, vote
share dependent public funding bene…ts the large party and makes it
moderate its candidate, while the smaller party reacts by choosing a
more extremist candidate. On balance, however, if the parties are not
too asymmetric, an increase in vote share dependent funding improves
welfare and increases the likelihood that a moderate candidate wins
the election

Original language	English
Publisher	Economic Policy Research Unit. Department of Economics, University of Copenhagen
Number of pages	30
Publication status	Published - 2012

Keywords

Faculty of Social Sciences

Access to Document

http://web.econ.ku.dk/eprn_epru/Workings_Papers/WP-12-05.pdf

Cite this

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title = "Public funding of political parties when campaigns are informative",

abstract = "The paper considers public funding of political parties when some voters are poorly informed about parties{\textquoteright} candidates and campaigns are informative. For symmetric equilibria, it is shown that more pub- lic funding leads parties to chose more moderate candidates, and that an increase in the funding{\textquoteright}s dependence on vote shares induces fur- ther moderation and improves welfare. If parties are asymmetric, vote share dependent public funding bene…ts the large party and makes it moderate its candidate, while the smaller party reacts by choosing a more extremist candidate. On balance, however, if the parties are not too asymmetric, an increase in vote share dependent funding improves welfare and increases the likelihood that a moderate candidate wins the election",

keywords = "Faculty of Social Sciences, political economy, Parties, Public Funding, Informative Advertising, Campaign Finance",

author = "Ort{\'i}n, {Ignacio Ortu{\~n}o} and Christian Schultz",

note = "JEL classification: JEL: D72, D78, D82",

year = "2012",

language = "English",

publisher = "Economic Policy Research Unit. Department of Economics, University of Copenhagen",

type = "WorkingPaper",

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T1 - Public funding of political parties when campaigns are informative

AU - Ortín, Ignacio Ortuño

AU - Schultz, Christian

N1 - JEL classification: JEL: D72, D78, D82

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N2 - The paper considers public funding of political parties when some voters are poorly informed about parties’ candidates and campaigns are informative. For symmetric equilibria, it is shown that more pub- lic funding leads parties to chose more moderate candidates, and that an increase in the funding’s dependence on vote shares induces fur- ther moderation and improves welfare. If parties are asymmetric, vote share dependent public funding bene…ts the large party and makes it moderate its candidate, while the smaller party reacts by choosing a more extremist candidate. On balance, however, if the parties are not too asymmetric, an increase in vote share dependent funding improves welfare and increases the likelihood that a moderate candidate wins the election

AB - The paper considers public funding of political parties when some voters are poorly informed about parties’ candidates and campaigns are informative. For symmetric equilibria, it is shown that more pub- lic funding leads parties to chose more moderate candidates, and that an increase in the funding’s dependence on vote shares induces fur- ther moderation and improves welfare. If parties are asymmetric, vote share dependent public funding bene…ts the large party and makes it moderate its candidate, while the smaller party reacts by choosing a more extremist candidate. On balance, however, if the parties are not too asymmetric, an increase in vote share dependent funding improves welfare and increases the likelihood that a moderate candidate wins the election

KW - Faculty of Social Sciences

KW - political economy

KW - Parties

KW - Public Funding

KW - Informative Advertising

KW - Campaign Finance

M3 - Working paper

BT - Public funding of political parties when campaigns are informative

PB - Economic Policy Research Unit. Department of Economics, University of Copenhagen

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