The number of parties and political competition

Abstract

If we view one-party politics as monopoly and representative democracy as “a competitive struggle for people’s votes”, ¹ an increase in the number of political parties should appear the best device to keep public choices close to voters’ preferences. Still, there is something puzzling in the proposition “the more the parties, the better the democracy”, and it is far from clear how the entry of new parties can reduce politicians’ degrees of freedom and therefore their rents. Under rather broad conditions (Frank 1965), in economic markets, rents are reduced as far as the entry of new firms makes more elastic the demand faced by each. In political markets, things appear more complicated. If we accept Hotelling’s convergence at the median, in two-party systems ideologically similar political parties are engaged mainly in the struggle for controlling the government apparatus: This struggle might be named, following Demsetz’s (1968), “competition for the field“. In multi-party political systems, however, leading parties are simultaneously engaged in a second and relatively stronger struggle for opinion representation, occurring inside each political area (competition within the field). If more is better than less, the second situation should be preferable, unless there is a trade-off between those two forms of competition. The presence of such a trade-off is the main focus of this paper. I plan to show that stronger competition within the field occurs at the expense of competition for the field: the entry of more parties, though making more elastic the demand faced by minor parties, makes less elastic the demand “for government”, with doubtful effects on the reduction of political rents.

The author would like to thank the participants in the seminar for their useful comments. Special thanks are due to Vani Borooah, Giorgio Brosio, Valentino Dardanoni, Dennis Mueller, and Allan Schmid for their observations on an earlier version of the paper.