On the Benets of Party Competition

We study the role of parties in a citizen-candidate repeated-elections model where voters have incomplete information. We identify a novel “party competition e¤ect.”Compared with “at large” selection of candidates, party selection makes o¢ ce-holders more willing to avoid extreme ideological stands. Politicians follow party discipline, even in absence of a party-controlled reward mechanism. Voters of all ideologies bene…t from the party-competition e¤ect, which thus provides a novel rationale for political parties. When politicians have an (imperfect) informational advantage over voters, we additionally …nd a “party screening e¤ect.” Parties select moderate candidates, because they anticipate that their candidate’s ideological record can be veri…ably disclosed through campaigning. Under reasonable functional assumptions, all voters bene…t from party screening. We thank the audiences of seminars at the Wallis Institute, Rochester University, at Southampton University, of the 2004 Workshop in Political Economy at Stony Brook, the 2004 Political Economy Workshop at Vienna, the 2005 Society for Advancement of Economic Theory Conference in Vigo, and especially Jim Snyder, for their comments. Nate Anthony helped signi…cantly in this research.