Vote-Share Contracts and Learning-by-Doing

Markus Müller ()
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Markus Müller: CER-ETH - Center of Economic Research at ETH Zurich, Switzerland

No 09/114, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We examine the interaction between vote-share contracts and learning-by-doing. Candidates for a political office are allowed to offer vote-share thresholds. The elected politician has to achieve at least this threshold value in his reelection result to remain in office for a second term. We assume there are learningby- doing effects for incumbents and show that competition leads to vote-share contracts implementing the socially optimal threshold, which is above one-half. Vote-share contracts improve the average ability level of a reelected politician and increase effort in the first term of an incumbent. On the other hand, vote-share contracts reduce the probability that learning-by-doing takes place. However, the overall effect of vote-share contracts is welfare-enhancing, even under the assumption of learning-by-doing.

Keywords: elections; political contracts; vote-share thresholds; learning-by-doing effects; incumbency advantage (search for similar items in EconPapers)
JEL-codes: D71 D82 H4 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2009-07
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pol
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