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This work gives a theoretical explanation of party polarization in American politics and explains the lack of party convergence as a result of imperfect political competition. We introduce a formal model that demonstrates how convergence occurs only in perfect markets and rarely in American politics. By modifying key Downsian assumptions about the electorate and parties in a two-party system, we derive conclusions that indicate political advantage varies with the composition of the political districts. This alters the range of available positions that a candidate may take (congruent with winning elections) and sheds light on the relationship between local economic trends and political power.

Party Polarization and Political Markets: A Model of Electoral Competition and Candidate Positioning