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A Simple Model of Political Contributions

Author

Listed:
  • Benjamin Bental

    (Technion—Israel Institute of Technology)

  • Uri Ben-Zion

    (Ben-Gurion University)

Abstract

A microeconomic model of supply and demand for political contributions is developed. The supply is derived from the behavior of firms which want to maximize the expected gain from supporting political candidates in an election campaign. These firms allocate funds to opposing candidates, and equate the expected marginal return of a dollar contributed to each candidate. The maximizing conditions lead to a comparative statistics analysis. The demand for contributions is derived by positing that political candidates derive utility from their prospects of being elected and from some favored political stance. The latter may be traded for contributions, which enhance the candidate's election probability. The implications of this simple theory are tested using the 1972 congressional elections results. Simultaneity problems are solved by using two-stage least-squares techniques. The results of the empirical analysis conform reasonably well with the predictions of the theoretical model.

Suggested Citation

  • Benjamin Bental & Uri Ben-Zion, 1981. "A Simple Model of Political Contributions," Public Finance Review, , vol. 9(2), pages 143-157, April.
    • Handle: RePEc:sae:pubfin:v:9:y:1981:i:2:p:143-157
    DOI: 10.1177/109114218100900202
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    References listed on IDEAS

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    4. William Welch, 1974. "The economics of campaign funds," Public Choice, Springer, vol. 20(1), pages 83-97, December.
    5. Ashenfelter, Orley C & Kelley, Stanley, Jr, 1975. "Determinants of Participation in Presidential Elections," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 695-733, December.
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    7. J. Fred Giertz & Dennis Sullivan, 1977. "Campaign expenditures and election outcomes: A critical note," Public Choice, Springer, vol. 31(1), pages 157-162, September.
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