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Public funding of political parties when campaigns are informative Abstract: The paper considers public funding of political parties when some voters are poorly informed about parties? candidates and campaigns are informative. For symmetric equilibria, it is shown that more public funding leads parties to chose more moderate candidates, and that an increase in the funding's dependence on vote shares induces further moderation and improves welfare. If parties are asymmetric, vote share dependent public funding bene?ts the large party and makes it moderate its candidate, while the smaller party reacts by choosing a more extremist candidate. On balance, however, if the parties are not too asymmetric, an increase in vote share dependent funding improves welfare and increases the likelihood that a moderate candidate wins the election

Ignacio Ortuño Ortín and Christian Schultz
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Ignacio Ortuño Ortín: Department of Economics, University Carlos III
Christian Schultz: Department of Economics, University og Copenhagen

No 2012-05, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Keywords: Political Economy; Parties; Public Funding; Informative Advertising; Campaign Finance (search for similar items in EconPapers)
JEL-codes: D72 D78 D82 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-06
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