A Theory of Political Competition over Military Policy and Income Redistribution

Naoki Yoshihara (), 直毅 吉原 and ナオキ ヨシハラ

No a503, Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: We discuss political competition games between Left and Right parties, in which the policy space is two dimensional. One issue is the choice of proportional tax rate, and the second is the allocation of tax revenue between military policies and social welfare policies. On these political issues, the stylized fact is that left-wing parties prefer higher tax rates and lower military expenditure than do right-wing parties. We examine the kinds of political environments in which this fact can be rationalized as the equilibrium outcome of a given political game. By adopting the notion of the party-unanimity Nash equilibrium [Roemer (1998; 1999; 2001; 2005)], not only voters' economic motivations, but also their ideological positions are shown to be crucial factors in explaining stylized party behavior.

Keywords: multidimensional political competition games; partyunanimity Nash equilibria; military expenditure; ideological concerns (search for similar items in EconPapers)
JEL-codes: C62 C72 D72 D78 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-07
New Economics Papers: this item is included in nep-cdm and nep-pol
Note: This version June 2008
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hituec:a503

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