Electoral Competition with Costly Policy Changes: A Dynamic Perspective

Hans Gersbach, Matthew Jackson, Philippe Muller and Oriol Tejada

No 14858, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyze two-party electoral competition with a one-dimensional policy space, costly policy changes, and random negative shocks to a party's viability over an infinite horizon. We show the existence and uniqueness of stationary Markov perfect equilibria in which parties use so-called simple strategies. Regardless of the initial policy, party choices converge in the long run to a stochastic alternation between two policies, with transitions occurring if and only if parties suffer a negative shock to their viability. Although costs of change have a moderating effect on policies, full convergence to the median voter position does not take place when parties are polarized.

Keywords: Elections (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-mic and nep-pol
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Citations: View citations in EconPapers (4)

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Journal Article: Electoral competition with costly policy changes: A dynamic perspective (2023)
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