Working papers

Inequality and the Cost of Electoral Campaigns:
The Cases of Brazil and Japan

Mauricio Bugarin

Worldwide corruption scandal episodes frequently associate political corruption with the increasing costs of electoral campaign. This calls for better understanding the dynamics of electoral campaign financing. The present research analyzes the role of income inequality on the costs of elections. First, a game-theoretic, political-economy model of voting in unequal constituencies concludes that higher income inequality increases private contributions to electoral campaigns. The intuition of that result is straightforward. As society gets more heterogeneous, parties representing different income groups support opposing policies; therefore, interest groups have higher incentives to contribute to the campaign, in order to avoid a very unfavorable policy being implemented if an opposing party wins. Next, that hypothesis is carefully tested using both cross-sectional electoral data from Brazilian 5564 municipalities and panel data from Japanese House of Councillor’s prefectural-tier elections from 1977 to 2010. All tests support the hypothesis that more unequal societies engender more expensive elections.

Partisan Voluntary Transfers in a Fiscal Federation:
New evidence from Brazil

Mauricio Bugarin and Ricardo Ubrig

This article presents an empirical test to the hypothesis of partisan voluntary transfers in Brazil. That hypothesis postulates that municipalities receive significantly more transfers from the State (Federal) government if the mayor belongs to the governor’s (president’s) party, or to a coalition of parties that supported him in the electoral campaign. The econometric evidence strongly suggests that partisan transfers are broadly used in Brazil regardless of the ideological position or other characteristics of the party holding the presidency or the state government. This calls for tighter regulations in order to redress the bias caused by partisan transfers in Brazil.


Should Voting Be Mandatory?
The social welfare effect of political participation

Mauricio Bugarin and Adriana Portugal

This article analyzes the effect of political participation in the electoral process on parties’ announced platforms and on social welfare in a model of electoral competition with public and private campaign financing. The model highlights two different biases of the announced platforms: one that favors lobby groups, and the other that favors groups with higher voter participation. Public financing is shown to have no effect on either bias. There exists empirical evidence that wealthier classes present higher levels of political participation. In that situation, the model suggests that mandatory voting may be a useful mechanism to reduce these biases.

On the Optimality of Exclusion in Multi-dimensional Screening

Paulo Barelli, Suren Basov, Mauricio Bugarin and Ian King

We extend Armstrong (1996)’s result on exclusion in multi-dimensional screening models in two key ways, providing support for the view that this result holds true in a large class of models and is applicable to many different markets. First, we relax the strong technical assumptions he imposed on preferences and consumer types. Second, we extend the result beyond the monopolistic market structure to some oligopoly settings. We illustrate the results with examples and applications.

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