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Funding Asymmetries in Electoral Competition: How important is a level playing field?

Author

Listed:
  • Christoph Vanberg

    (Cornell)

Abstract
I investigate the idea that campaign spending limits may help to level the playing field in electoral competition between parties who have unequal access to campaign funds. The model assumes that the supporters of one party are on average wealthier than those who support a competing party. Contributions are used to finance advertisements that truthfully reveal information about the quality of candidates. Voters update their beliefs rationally based on information revealed during the campaign. Rational beliefs are shown to compensate for funding asymmetries in equilibrium. As a result, asymmetries in access to funds do not bias the electoral outcome from an ex ante perspective. A limit on campaign expenditures does not affect the relative chances of the two parties, while leading to unintended negative consequences. I conclude that the level playing field argument in support of expenditure limitations is inconsistent with the key assumptions of the analysis and offer some suggestions for future research.

Suggested Citation

  • Christoph Vanberg, 2004. "Funding Asymmetries in Electoral Competition: How important is a level playing field?," Public Economics 0402002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwppe:0402002
    Note: Type of Document - pdf; pages: 30
    as

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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/pe/papers/0402/0402002.pdf
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    References listed on IDEAS

    as
    1. Andrea Prat, 2002. "Campaign Advertising and Voter Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 999-1017.
    2. Baron, David P., 1994. "Electoral Competition with Informed and Uninformed Voters," American Political Science Review, Cambridge University Press, vol. 88(1), pages 33-47, March.
    3. Feddersen, Timothy J & Pesendorfer, Wolfgang, 1996. "The Swing Voter's Curse," American Economic Review, American Economic Association, vol. 86(3), pages 408-424, June.
    4. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(2), pages 265-286.
    5. Stephen Coate, 2004. "Political Competition with Campaign Contributions and Informative Advertising," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 772-804, September.
    6. David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jenny De Freitas, 2009. "Political support for the private system to finance political parties," DEA Working Papers 35, Universitat de les Illes Balears, Departament d'Economía Aplicada.

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    More about this item

    Keywords

    Elections; Campaign Finance; Parties; Campaign Contributions; Asymmetries; Voting;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H - Public Economics

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