Political Competitiveness

Casey Mulligan and Kevin Tsui ()

No 12653, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Political competitiveness - which many interpret as the degree of democracy - can be modeled as a monopolistic competition. All regimes are constrained by the threat of "entry," and thereby seek some combination of popular support and political entry barriers. This simple model predicts that many public policies are unrelated to political competitiveness, and that even unchallenged nondemocratic regimes should tax far short of their Laffer curve maximum. Economic sanctions, odious debt repudiation, and other policies designed to punish dictators can have the unintended consequences of increasing oppression and discouraging competition. Since entry barriers are a form of increasing returns, democratic countries (defined according to low entry barriers) are more likely to subdivide and nondemocratic countries are more likely to merge. These and other predictions are consistent with previous empirical findings on comparative public finance, election contests, international conflict, the size of nations, and the Lipset hypothesis. As in the private sector, the number of competitors is not necessarily a good indicator of public sector competitiveness.

JEL-codes: H11 L12 P16 (search for similar items in EconPapers)
Date: 2006-10
New Economics Papers: this item is included in nep-pbe and nep-pol
Note: IO PE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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