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The Impact of Campaign Finance Laws on Party Competition

  • Joshua D. Potter and Margit Tavits

Abstract

The comparative literature on party systems has convincingly demonstrated that electoral rules, social cleavages and their interaction can explain much of the cross-national variation in the size of party systems. This literature, however, has thus far ignored campaign finance laws. This article argues that various campaign finance laws exert more or less restrictive pressures on party competition. It develops a new theoretical concept, fund parity. The study demonstrates the positive relationship between fund parity and party system size and employs additional tests to supplement the regression analysis in order to account for potential endogeneity issues. The findings underscore an intuitive – but heretofore untested – relationship: increasing parity makes party competition more permissive and increases the size of the party system.

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Post-Doctoral Research Fellow, Department of Political Science, Washington University in St. Louis (email: jdpotter@wustl.edu); Associate Professor, Department of Political Science, Washington University in St. Louis (email: tavits@wustl.edu). Previous versions of this article were presented at The Effects of District Magnitude Conference in Lisbon, Portugal, 2012; The Pathologies of Elections Workshop in St. Louis, USA, 2013; and the Annual Meeting of the Midwest Political Science Association in Chicago, USA, 2013. The authors would like to thank Leonardo Arriola, André Blais, Dawn Brancati, Randy Calvert, Brian Crisp, Bernard Grofman, Thomas Gschwend, Timothy Hellwig, Ignacio Lago, Dante Scala, Richard Skinner, Jonathan Slapin, Guillermo Rosas and the anonymous reviewers for their helpful insights. Joshua D. Potter acknowledges financial support from the National Science Foundation (Grant SES-1124469) and Margit Tavits acknowledges financial support from the Weidenbaum Center on the Economy, Government, and Public Policy at Washington University in St. Louis. Replication materials can be found online at jdpotter.wustl.edu/Research. Data replication sets are available at http://dx.doi.org/doi:10.1017/S0007123413000227.

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