Elections and Campaign Contributions

Abstract

We examine a model of campaigns in which contributors support candidates who choose political platforms and engage in costly campaigning. Interest groups decide to whom and how much to contribute. We show that donors may financially support one candidate in order to moderate his opponent's platform, and vote for that opponent to ensure the desired moderate outcome. Interest groups with extreme preferences tend to outspend contributors with moderate policy preferences. Hence, we expect a bimodal distribution of contributions. If donors are not very asymmetrically distributed around the median, we observe a convergence of the political outcome towards the median due to campaigns. In this case, regulatory concerns about elections being bought with unrestricted contributions to campaigns are unfounded.

JEL Classification: D72