Endogenous Parties: Cooperative and Non-Cooperative Analysis

In Levy (2004) I attempt to analyze whether political parties are effective. That is, whether they change the political outcome relative to the case in which they do not exist and candidates can only run independently. The main result shows that parties are not effective when the policy space is one dimensional but may become effective when the policy space has more than one dimension. To derive this result, restrictions are imposed on how parties can form and which array of parties is defined as stable. This paper shows the robustness of the results in Levy (2004) to the introduction of different stability concepts for endogenous party formation. In the model, society is formed of N groups, with cardinality n. The size of group i as a share of the population is pi, P i=1,..,n pi = 1. There is a feasible policy set Q ⊆ Rk. Each group of voters, i, has a preference ordering oi on Q represented by a utility function ui : Q → R which is continuous and concave.1 I will focus on preferences which are single-peaked. The ideal policy of group i is denoted for simplicity by i and the utility function admits ui(q) = u(q, i). These groups form the set of voters. The set of players is composed of a representative from each group, i.e., there are n (finite) players, with player i having the same ideological preferences as group i. In the first phase of the analysis, which I introduce in the next section, the players are organized in coalitions/parties. These coalitions choose platforms on which the voters vote sincerely. The platform that receives the highest number of votes is implemented. In this phase, we analyze the possible equilibria in the platform game for any coalition structure. In the second phase, we determine which are the equilibria and the coalition structures that are stable. This is introduced in section 3, by using different stability concepts. The aim is to compare the stable political outcomes in the presence of parties, and in the absence of parties, i.e., when