Working Paper: NBER ID: w9601
Authors: Stephen Coate
Abstract: This paper argues that campaign finance policy, in the form of contribution limits and matching public financing, can be Pareto improving even under the most optimistic assumptions concerning the role of campaign advertising and the rationality of voters. The argument assumes that candidates use campaign contributions to convey truthful information to voters about their qualifications for office and that voters update their beliefs rationally on the basis of the information they have seen. It also assumes that campaign contributions are provided by interest groups and that candidates can offer to provide policy favors for their interest groups to attract higher contributions. The argument is developed in the context of a simple model of political competition with campaign contributions and informative advertising.
Keywords: Campaign Finance; Political Competition; Public Financing; Contribution Limits
JEL Codes: D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Campaign Contributions (K16) | Candidate Qualifications (K16) |
| Candidate Qualifications (K16) | Voter Behavior (K16) |
| Campaign Contributions (K16) | Voter Behavior (K16) |
| Public Financing (H49) | Campaign Effectiveness (D79) |