Public funding of political parties when campaigns are informative

Research output: Working paperResearch

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 languageEnglish
PublisherEconomic Policy Research Unit. Department of Economics, University of Copenhagen
Number of pages30
Publication statusPublished - 2012

ID: 38557081