Political Entry, Public Policies, and the Economy

44 Pages Posted: 10 Mar 2008 Last revised: 27 Mar 2008

See all articles by Casey B. Mulligan

Casey B. Mulligan

University of Chicago; National Bureau of Economic Research (NBER)

Kevin K. Tsui

Clemson University - John E. Walker Department of Economics

Date Written: March 2008

Abstract

This paper presents a theory of competition for political leadership between incumbent leaders and their challengers in which the possible equilibrium political market structures range from pure monopoly (unchallenged dictatorship) to perfectly competitive (ideal democracy). Leaders are constrained by the threat of "entry" or their ability to tax (or both), so that regimes with no challengers may nonetheless implement policies in the public interest. We offer economic interpretations of why democratic countries are associated with higher wages, why resource abundant countries tend to be nondemocratic, and how technological change affects political development. By focusing on the incentives for political entry, we show how trade sanctions and other policies designed to promote democracy may actually have the unintended consequences of discouraging political competition.

Suggested Citation

Mulligan, Casey B. and Tsui, Kevin K., Political Entry, Public Policies, and the Economy (March 2008). NBER Working Paper No. w13830. Available at SSRN: https://ssrn.com/abstract=1104167

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

1126 East 59th Street
Chicago, IL 60637
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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Kevin K. Tsui

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

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