The Economics of Bipartisan Campaign Reform

John Cadigan

Journal of Public Economic Theory, 2006, vol. 8, issue 4, 555-569

Abstract: This essay evaluates two provisions in the Bipartisan Campaign Reform Act (BCRA): raising contribution limits and banning soft money. The model highlights the importance of marginal cost ratios for candidates and their parties. The results suggest that raising contribution limits protects incumbents. Importantly, this generates efficiency gains that come at the expense of electoral competitiveness. When a party has an advantage in a large number of districts, the soft money ban may also reduce rent‐seeking effort while exacerbating existing advantages. Ultimately, the two provisions underscore an “equity‐efficiency” trade‐off. While restricting rent‐seeking effort, they probably lead to less competitive elections.

Date: 2006
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