Yardstick competition: a spatial voting model approach

Canegrati, Emanuele (2006): Yardstick competition: a spatial voting model approach. Unpublished.

Abstract

I analyse a yardstick competition game using a spatial voting model, where voters vote for a candidate according to the distance between their Ideal Point and the policy selected by a candidate. The policy which is closest to a voter’s IP provides the voter with a higher utility so that minimizing the distance means maximising the utility. I demonstrate that in the presence of asymmetrical information the existence of yardstick competition entails a selection device but not a discipline device, suggesting the existence of a trade off between these two goals. In the second part, I analyse an economic environment characterised by the presence of shocks, whose sign and magnitude are private information of incumbents. This time, the introduction of yardstick competition acts both as a selection and a discipline device.

• Item Type: MPRA Paper
• Language: English
• Subjects: H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H73 - Interjurisdictional Differentials and Their Effects; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior; I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs