Working Paper: NBER ID: w13830
Authors: Casey B. Mulligan; Kevin K. Tsui
Abstract: This paper presents a theory of competition for political leadership between incumbent leaders and their challengers in which the possible equilibrium political market structures range from pure monopoly (unchallenged dictatorship) to perfectly competitive (ideal democracy). Leaders are constrained by the threat of "entry" or their ability to tax (or both), so that regimes with no challengers may nonetheless implement policies in the public interest. We offer economic interpretations of why democratic countries are associated with higher wages, why resource abundant countries tend to be nondemocratic, and how technological change affects political development. By focusing on the incentives for political entry, we show how trade sanctions and other policies designed to promote democracy may actually have the unintended consequences of discouraging political competition.
Keywords: Political Entry; Public Policy; Economic Development; Democracy; Political Competition
JEL Codes: H11; L12; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political entry (D72) | public policies (J18) |
| economic conditions (E66) | political entry (D72) |
| political competitiveness (measured by entry barriers) (D72) | public policies (J18) |
| entry barriers (L13) | political competitiveness (D72) |
| political competitiveness (D72) | higher wages (J39) |
| trade sanctions (F51) | entry barriers (L13) |
| policies promoting democracy (P16) | entry barriers (L13) |