Between Election Rivalry and the Agency Costs of Government: The Effectiveness of Party Competition Across Indian States, 1957–2018*

J. Stephen Ferris and Bharatee Dash

Public Finance Review, 2024, vol. 52, issue 3, 314-344

Abstract: Two dimensions of the intensity of interparty rivalry are used to test the hypothesis that greater interparty competition enhances government efficiency. Using data from a set of 14 large Indian state governments between 1957 and 2018, we find confirmation for two political rivalry hypotheses. The first is that the ex-post size of the first versus second place seat share winning margin is a useful metric of the (in)effectiveness of rival party policing of incumbent spending behavior. The second is the hypothesis that excessive spending by the incumbent governing party is decreased by the expectation of greater election contestability and that contestability is related to the expected effective number of competing parties ( ENPSeats ) nonmonotonically. Our analysis suggests that contestability across Indian States reaches a maximum when the incumbent faces an expectation of ENPSeats that is closer to 5 than to Duverger's 2.

Keywords: contestability; winning margin; interparty rivalry; political competition; finite polynomial regression; government size (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:52:y:2024:i:3:p:314-344

DOI: 10.1177/10911421231204651

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