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A Dynamic Model of Political Party Equilibrium: The Evolution of ENP in Canada, 1870–2015

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Abstract

The effective number of political parties (ENP) in a first-past-the-post single member (SMP) electoral system is analyzed as a dynamic process whereby the tournament nature of the election contest induces excessive entry and sunk entry costs promote persistence even as Duverger-Demsetz type political competition works to winnow unsuccessful minor candidates and parties. The result is a fringe of parties circulating in long run equilibrium. The factors hypothesized to affect the entry and exit of candidates and parties are analyzed first using an auto-regressive distributed lag (ARDL) model that allows for the separation of an evolving equilibrium time path from short run variations in response to transitory changes in conditioning variables and the process of convergence back to the long run equilibrium. The possibility that the short run adjustment process is asymmetric either for parties or candidates is tested adopting panel estimation techniques. The results are consistent with an observed time path for parties that incorporates slower adjustment to positive as opposed to negative shocks. Variations in the size and trend of both the long and short run are then examined for ENP’s ability to predict changes in the competitiveness of the Canadian federal electoral system.

Suggested Citation

  • J. Stephen Ferris & Stanley L. Winer & Derek Olmstead, 2018. "A Dynamic Model of Political Party Equilibrium: The Evolution of ENP in Canada, 1870–2015," Carleton Economic Papers 18-04, Carleton University, Department of Economics, revised 31 Jul 2019.
    • Handle: RePEc:car:carecp:18-04
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    More about this item

    Keywords

    Expected number of political parties; entry and exit; Duverger’s Law; asymmetric adjustment; ARDL and NARDL modeling;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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