Implementation via political parties

Abstract

Most public sector policies are implemented not by mechanisms but by political parties. The literature focused on the convergence of policies to alternatives such as the Condorcet winner under particular assumptions about the set of policies. In this paper, we consider a wide range of socially optimal policies, including the Condorcet winner, an unstructured set of policies, and party preferences defined over office shares, parliamentary shares, and policies. The latter reflects ideology and effort to achieve policies. We search for party preferences that induce the socially optimal policy as the only Nash equilibrium. Our main results are: (1) to sustain the socially optimal policy as a Nash equilibrium, no assumptions about how parties rank policies are necessary, and (2) to eliminate equilibria that yield non-socially optimal policies, we need the following: with two parties, they must prioritize office and parliamentary shares to policies; with three or more parties, they must prefer being in office to anything else. An important implication is that political parties prioritizing office may be better suited to achieving desirable outcomes than those driven by ideological commitments.

Keywords: Nash equilibrium, Political competition, Policy convergence, Power-driven preferences, Power shares, Social optimality D71, D72, D82