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Electoral competition with costly policy changes: A dynamic perspective

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  • NETL
  • NSTL
  • Elsevier
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.

ElectionsCosts of changePolitical polarizationMarkov perfect equilibrium

Hans Gersbach、Matthew O. Jackson、Philippe Muller、Oriol Tejada

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KOF Swiss Economic Institute, ETH Zurich and CEPR, Leonhardstrasse 21, 8092 Zurich, Switzerland

Department of Economics, Stanford University, 579 Jane Stanford Way, 94305-6072 CA, USA

CER-ETH- Center of Economic, Research at ETH Zurich, Zuerichbergstrasse 18, 8092 Zurich, Switzerland

Faculty of Economics and Business, and BEAT, Universitat de Barcelona, Diagonal 690-696, 08034 Barcelona, Spain

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2023

10.1016/j.jet.2023.105716

Journal of economic theory

Journal of economic theory

ISSN：0022-0531
年,卷(期)：2023.214(Dec.)
  • 59