TY  - JOUR
AU  - Mulligan,Casey B.
AU  - Tsui,Kevin K.
TI  - Political Competitiveness
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12653
PY  - 2006
Y2  - October 2006
UR  - http://www.nber.org/papers/w12653
L1  - http://www.nber.org/papers/w12653.pdf
N1  - Author contact info:
Casey Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu

Kevin K. Tsui
Sirrine Hall
Clemson, SC  29634
E-Mail: ktsui@clemson.edu
AB  - Political competitiveness – which many interpret as the degree of democracy – can be modeled as a monopolistic competition.  All regimes are constrained by the threat of "entry," and thereby seek some combination of popular support and political entry barriers.  This simple model predicts that many public policies are unrelated to political competitiveness, and that even unchallenged nondemocratic regimes should tax far short of their Laffer curve maximum.  Economic sanctions, odious debt repudiation, and other policies designed to punish dictators can have the unintended consequences of increasing oppression and discouraging competition.  Since entry barriers are a form of increasing returns, democratic countries (defined according to low entry barriers) are more likely to subdivide and nondemocratic countries are more likely to merge.  These and other predictions are consistent with previous empirical findings on comparative public finance, election contests, international conflict, the size of nations, and the Lipset hypothesis.  As in the private sector, the number of competitors is not necessarily a good indicator of public sector competitiveness.
ER  -