A Dynamic Model of Political Party Equilibrium: The Evolution of ENP in Canada, 1870-2015

45 Pages Posted: 7 Jul 2020

See all articles by J Stephen Ferris

J Stephen Ferris

Carleton University

Stanley L. Winer

Carleton University - School of Public Policy and Administration; Carleton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Derek Olmstead

University of Calgary

Date Written: 2020

Abstract

The effective number of political parties (ENP) in a single member plurality rule electoral system is analyzed as a dynamic process whereby the tournament nature of the election contest induces excessive entry and sunk entry costs promote persistence even as Duverger-Demsetz type political competition works to winnow unsuccessful minor candidates and parties. The result is a fringe of parties that continue to circulate in long run equilibrium. The factors hypothesized to affect the entry and exit of candidates and parties are analyzed for Canada from 1870 through 2015 first using an auto-regressive distributed lag (ARDL) model and then allowing for asymmetric adjustment by adapting NARDL panel estimation techniques. After finding evidence of asymmetry at the party level, the NARDL results uncover two new stylized facts for ENP at the national party level: (i) a continual rise in the short run fringe after 1945; and (ii) a concomitant long run decline in ENP to about 1.5 (below Duverger's prediction of 2). The long run time path in ENP at the party level is inversely correlated with uncertainty-based measures of electoral competition, suggesting that movements in long run ENP closer to 2 are an indicator of more rather than less electoral competition.

JEL Classification: D720, C410, C240

Suggested Citation

Ferris, J Stephen and Winer, Stanley L. and Olmstead, Derek, A Dynamic Model of Political Party Equilibrium: The Evolution of ENP in Canada, 1870-2015 (2020). CESifo Working Paper No. 8387, Available at SSRN: https://ssrn.com/abstract=3642385

J Stephen Ferris (Contact Author)

Carleton University ( email )

1125 colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

Stanley L. Winer

Carleton University - School of Public Policy and Administration ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 x2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

Carleton University - Department of Economics ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 ex.2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Derek Olmstead

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

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