A Model of Endogenous Government Formation

Political parties bargain over the allocation of cabinet portfolios when forming coalition governments. Non-cooperative theories of legislative bargaining typically predict that the “formateur” enjoys a disproportionate share of government ministry positions. However, empirical evidence indicates that parties receive shares of portfolios proportional to their share of legislative seats that a government party contributes to the government coalition, in support of Gamson’s Law of portfolio allocation. This paper examines government formation as a process in which both the government coalition and the formateur are determined endogenously. In equilibrium, if parties have similar preferences over cabinet portfolios, the share of seats they are allocated is proportional to the parties’ sizes.