Political Competitiveness

47 Pages Posted: 20 Nov 2006 Last revised: 30 Jul 2010

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: October 2006

Abstract

Political competitiveness - which many interpret as the degree of democracy - can be modeled as a monopolistic competition. All regimes are constrained by the threat of "entry," and thereby seek some combination of popular support and political entry barriers. This simple model predicts that many public policies are unrelated to political competitiveness, and that even unchallenged nondemocratic regimes should tax far short of their Laffer curve maximum. Economic sanctions, odious debt repudiation, and other policies designed to punish dictators can have the unintended consequences of increasing oppression and discouraging competition. Since entry barriers are a form of increasing returns, democratic countries (defined according to low entry barriers) are more likely to subdivide and nondemocratic countries are more likely to merge. These and other predictions are consistent with previous empirical findings on comparative public finance, election contests, international conflict, the size of nations, and the Lipset hypothesis. As in the private sector, the number of competitors is not necessarily a good indicator of public sector competitiveness.

Suggested Citation

Mulligan, Casey B. and Tsui, Kevin K., Political Competitiveness (October 2006). NBER Working Paper No. w12653. Available at SSRN: https://ssrn.com/abstract=940602

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-702-9017 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kevin K. Tsui

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

Clemson, SC 29634
United States

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