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WHY DOES A TWO‐PARTY SYSTEM EXIST?: A NEW ECONOMIC EXPLANATION *
Author(s) -
Fukuda ShinIchi
Publication year - 1992
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.1992.tb00088.x
Subject(s) - order (exchange) , political economy , politics , democracy , electoral system , political science , single non transferable vote , economics , convergence (economics) , duverger's law , realigning election , law and economics , economic system , socialism , law , macroeconomics , communism , finance
The purpose of this paper is to present a new economic explanation for why a multiple‐party system can endogenously arise as a result of the electoral process. The traditional view on the electoral process (i.e., the median voter theorem) is that political parties that pursue policies in the interest of the median voter are led to a convergence of policies. However, this view cannot explain why either conservative or liberal parties win election in many democratic countries. In order to explain this paradox, the following model considers an economy with three types of parties: conservative, middle, and liberal parties. In the model, the policy of each party is assumed to be time‐consistent, so that the policy of the middle party generally leads to suboptimal outcomes for the majority voters. Thus, the “rational” majority voters try to elect the political party whose objective is biased. As a result, the electoral process may lead to a two‐party system where both conservative and liberal parties have a chance to win election.