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An Economic Analysis of Campaign Finance

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Abstract

Electoral campaign finance is an important, and much debated, phenomenon in democracies throughout the world. This article discusses a possible economic model of campaign finance, which could be used for policy evaluation. At the core of the model lies an asymmetry of information between lobbies and voters. Lobbies know more than voters about the quality of candidates. Campaign contributions constitute an indirect way to reveal lobbies’ information to voters. However, this informational benefit comes at the cost of candidates deviating from the median voter’s preferred policy in order to attract higher contributions.

Suggested Citation

  • Andrea Prat, 2000. "An Economic Analysis of Campaign Finance," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 1(2), pages 13-27, April.
    • Handle: RePEc:wej:wldecn:12
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=12
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    Cited by:

    1. Rabinowicz, Ewa, 2004. "The Swedish Agricultural Policy Reform of 1990 : A Window of Opportunity for Structural Change in Policy Preferences," IAPRAP\IATRC Summer Symposium, Adjusting to Domestic and International Agricultural Reform in Industrial Countries, June 6-7, 2004, Philadelphia, PA, 15760, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    2. Elena Panova, 2007. "Congruence Among Voters and Contributions to Political Campaigns," Cahiers de recherche 0722, CIRPEE.

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