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Political Parties and Network Formation

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  • Topi Miettinen
  • Panu Poutvaara

Abstract

We argue that anticorruption laws may provide an efficiency rationale for why political parties should meddle in the distribution of political nominations and government contracts. Anticorruption laws forbid trade in spoils that politicians distribute. However, citizens may pay for gaining access to politicians and, thereby, to become potential candidates for nominations. Such rent-seeking results in excessive network formation. Political parties may reduce wasteful network formation, thanks to their ability to enter into exclusive membership contracts. This holds even though anticorruption laws also bind political parties.

Suggested Citation

  • Topi Miettinen & Panu Poutvaara, 2006. "Political Parties and Network Formation," CESifo Working Paper Series 1663, CESifo.
    • Handle: RePEc:ces:ceswps:_1663
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    More about this item

    Keywords

    political parties; two-sided platforms; rent-seeking; network formation;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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