Political Competition, Ideology and Corruption
University of Edinburgh Business School
University of Warwick - Finance Group
January 27, 2008
This paper presents a model of political competition, where voter decisions are affected by their ideological adherence to political parties. We derive a number of interesting results: First, we show that an equilibrium exists even though voting is fully deterministic. Second, corruption and inefficiencies arise as endemic phenomena of the political system. Third, if the distribution of ideology is asymmetric, then political contesters may follow different platforms in equilibrium. Fourth, political instability is desirable for selfish politicians, irrespectively of their risk aversion, because it weakens competition and becomes a natural base for rent-extractive policies. Finally, the higher the ideological adherence to a political party the more inefficient policies this party will follow. Some of these predictions are consistent with the results obtained by various empirical studies, while the rest, to the best of our knowledge, have not been tested yet.
Number of Pages in PDF File: 43
Keywords: corruption, political instability, voting behavior
JEL Classification: G21, G28, H32, P16, P43working papers series
Date posted: January 30, 2008
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