Political Competition in Government Formation: the Effect of Simultaneous Policy Bidding on the Political Outcome

Birol Baskan and Federico Boffa
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Birol Baskan: Northwestern University
Federico Boffa: Northwestern University

Microeconomics from EconWPA

Abstract: We present an alternative model of government formation in which two parties simultaneously and inpendently announce their polices proposals through a take-it-or-leave-it offer, to a third party - the formateur -, which picks the one that maximizes its own utility. As a consequence, the chosen policy proposal is implemented by a government coalition composed of the formateur and the party associated with the selected policy proposal. The model purposedly captures the political competition arising among the parties other than the formateur for the partnership in the governing coalition. The political equilibria resulting from the model confirm that the intensification of political competition among the parties, implied by the present framework, is beneficial for the formateur.

Keywords: Political; competition; goverment; formation (search for similar items in EconPapers)
JEL-codes: D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pol
Date: 2004-02-04
Note: Type of Document - pdf; prepared on winXP; pages: 15. Preliminary
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0402003

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