The 'Invisible Hand' of Vote Markets

This paper studies electoral competition between two non-ideological parties when voters are free to trade votes for money. We find that allowing for vote trading has significant policy consequences, even if trade does not actually take place in equilibrium. In particular, the parties' equilibrium platforms are found to converge (hence, there is no reason for vote trading) to the ideal policy of the mid-range voter, instead of converging to the peak of the median voter (as they do when vote trading is forbidden). That is, a market for votes may not change the outcome only by redistributing the political power among voters when the parties' policy proposals are fixed (e.g., Casella, Llorente-Saguer, and Palfrey, 2012, etc.), but also by acting as an invisible hand - modifying parties' incentives when platform choice is endogenous.