Citation

Discussion Paper Details

Please find the details for DP14858 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Electoral Competition with Costly Policy Changes: A Dynamic Perspective

Author(s): Hans Gersbach, Matthew O. Jackson, Philippe Muller and Oriol Tejada

Publication Date: June 2020

Keyword(s): costs of change, democracy, dynamic elections, Markov perfect equilibrium and Political Polarization

Programme Area(s): Industrial Organization and Public Economics

Abstract: We analyze dynamic electoral competition policy changes. The costs of changing a policy increase with the extent of the shift and generate an incumbency advantage. We characterize the dynamics of Markov equilibria in terms of history and party polarization, and analyze how policies are influenced by the amplitude and convexity of costs of change, as well as by the degree of party and voter farsightedness. Regardless of the initial policy, party choices converge in the long run to a stochastic alternation between two (regions of) policies, with transitions occurring when office-holders suffer a shock to their capacity or valence. Although costs of change have a moderating effect on policies, full convergence to the median voter position does not take place.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14858

Bibliographic Reference

Gersbach, H, Jackson, M, Muller, P and Tejada, O. 2020. 'Electoral Competition with Costly Policy Changes: A Dynamic Perspective'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14858