Political Competition with Endogenous Party Formation and Citizen Activists

The paper studies political competition between endogenously formed parties. For this purpose, it develops a theoretical model in which party formation allows like-minded citizens to coordinate their political behavior in two ways. First, they can share the cost of running in a public election. Second, they can select a candidate for this election from their ranks, thereby committing to a policy platform. The paper characterizes the set of political equilibria with two competing parties and with one uncontested party. In particular, it studies the policy platforms that can be offered by stable political parties. In equilibria with two competing parties, the distance between both platforms is always positive but limited, in contrast to both the median voter model and the citizen candidate model. In equilibria with one uncontested party, the median voter can be worse off than in equilibria with two competing parties.