Campaign Contributions and Political Polarization

Simge Tarhan

MPRA Paper from University Library of Munich, Germany

Abstract: Political candidates raise campaign funds from a variety of sources. Whether contributions from certain sources should be restricted has been the subject of debate in the U.S. since the Federal Election Campaign Act of 1971. I contribute to this debate by showing that the source of contributions affects the policy choice of candidates. When lobby contributions are limited, and candidates need to choose between costly fundraising activities or self-financing of the campaign, two types of candidates emerge: "rich" candidates with non-partisan positions and "poor" candidates choosing policies along party lines. An implication of the model is that restricting self-finance causes policy platforms to diverge under certain conditions. For instance, the Millionaires' Amendment in McCain-Feingold, which raised limits on contributions for candidates whose opponent is relying heavily on personal funds, could increase political polarization in the United States.

Keywords: Campaign finance; contribution limits; PACs; partisan voters; self-financing (search for similar items in EconPapers)
JEL-codes: D72 (search for similar items in EconPapers)
Date: 2010-11-01, Revised 2011-03-15
New Economics Papers: this item is included in nep-cdm and nep-pol
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