Impact of Electoral Competition, Swing Voters and Interest Group Lobbying on Strategic Determination of Equilibrium Policy Platforms

We extend the probabilistic voting model of Persson and Tabellini (2002) by utilizing exoge- nous parameters to capture corruption and the e ectiveness of campaign spending expenditure incurred by purely opportunistic electoral candidates. Incorporation of ideological di erences amongst voters as well as the embezzlement of campaign funds received by the electoral can- didates from the interest groups gives rise to a dual uncertainty within the model. We derive the equilibrium policy positions of the two opportunistic candidates in the scenario where none of the above uncertainties exist (the benchmark case), where only uncertainty about voters' preferences exist (swing voter case), and where both these uncertainties exist (case where both swing voters and lobby groups exist). We also provide a detailed comparison of the policy choices across these three equilibrium specifications. Furthermore, our comparative statics findings indicate that the impact of a change in various parameters, such as, the di erence be- tween the payoff received from winning and losing an election, a political candidate's corruption parameter, the proportion of uninformed voters and the ideological density of a voter group, on an electoral candidate's equilibrium policy platform relies on two main strategic forces, apart from the inherent centripetal e ect and the influence of campaign fund embezzlement, namely, the relative swing voter e ect and the relative organizational strength of lobbies e ect. In sum, the equilibrium tax platform is found to sway in favour of the more dominant e ect and towards the economic policy preferences of the voter group corresponding to the relatively stronger effect.