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Contributions And Elections With Network Externalities

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  • Adam Meirowitz
  • Alan E. Wiseman

Abstract

This paper develops a model of campaign contributions and electoral competition. Contributors have separable preferences over policy and the electoral success of the candidate they support, as in influence buying. Policy preferences are single peaked over a single policy dimension. A candidate's chances of victory are increasing in the relative size of her war chest. In equilibrium, potential contributors balance incentives to donate to a candidate that is desirable on policy grounds and ensuring that they back the likely winner. With exogenous candidate positions, we find conditions under which, in equilibrium, contributors donate to the candidate that is less desirable on policy grounds solely because they consider the candidate viable. We also find that there is a degree of indeterminacy, wherein multiple equilibria inducing different lotteries over the final policy often exist. With endogenous candidate locations, we find that while median policies are always supportable as equilibrium, it is often the case that any pair of candidate locations is supportable in equilibrium. These results suggest that in settings with substantial influence buying, median policy interests may not be represented.

Suggested Citation

  • Adam Meirowitz & Alan E. Wiseman, 2005. "Contributions And Elections With Network Externalities," Economics and Politics, Wiley Blackwell, vol. 17(1), pages 77-110, March.
    • Handle: RePEc:bla:ecopol:v:17:y:2005:i:1:p:77-110
    DOI: 10.1111/j.1468-0343.2005.00147.x
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    References listed on IDEAS

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    Cited by:

    1. Gil Epstein & Raphaël Franck, 2007. "Campaign resources and electoral success: Evidence from the 2002 French parliamentary elections," Public Choice, Springer, vol. 131(3), pages 469-489, June.
    2. Vincent A Traag, 2016. "Complex Contagion of Campaign Donations," PLOS ONE, Public Library of Science, vol. 11(4), pages 1-20, April.
    3. Rebecca Morton & Roger Myerson, 2012. "Decisiveness of contributors’ perceptions in elections," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(3), pages 571-590, April.
    4. Meirowitz, Adam, 2006. "Electoral Contests," Papers 06-21-2007, Princeton University, Research Program in Political Economy.
    5. Callander, Steven, 2008. "Majority rule when voters like to win," Games and Economic Behavior, Elsevier, vol. 64(2), pages 393-420, November.

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