An Economic Analysis of Campaign Finance

Andrea Prat
Authors registered in the RePEc Author Service: Abhinay Muthoo

World Economics, 2000, vol. 1, issue 2, 13-27

Abstract: Electoral campaign finance is an important, and much debated, phenomenon in democracies throughout the world. This article discusses a possible economic model of campaign finance, which could be used for policy evaluation. At the core of the model lies an asymmetry of information between lobbies and voters. Lobbies know more than voters about the quality of candidates. Campaign contributions constitute an indirect way to reveal lobbies' information to voters. However, this informational benefit comes at the cost of candidates deviating from the median voter's preferred policy in order to attract higher contributions.

Date: 2000
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