A Rationale for Decentralized Political Parties

Abstract:     
This paper provides a rationale for decentralized party structure within a political agency model with moral hazard. The focus is on the party's internal procedures for policy determination. I show that decentralizing those procedures benefits the party leadership, which seeks to maximize joint reelection chances of the party's incumbents. The reason is that under decentralized party structure, the voters adopt less demanding reappointment rules and reelect the party's incumbents more often than under centralized party structure. My results therefore indicate that decentralizing policy determination processes within the party is in the interests of both the leadership and the ordinary members. The voters in turn are equally well off regardless of the party's internal procedure for policy determination.

Number of Pages in PDF File: 21

Keywords: Decentralized party structure, Centralized party structure, Policy determination, Political agency, Moral hazard

JEL Classification: D72

working papers series