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Campaign advertising and voter welfare

By Andrea Prat

Abstract

This paper investigates the role of campaign advertising and the opportunity of legal restrictions on it. An electoral race is modelled as a signalling game with three classes of players: a continuum of voters, two candidates, and one interest group. The group has non-verifiable insider information on the candidates’ valence and, on the basis of this information, offers a contribution to each candidate in exchange for a favourable policy position. Candidates spend the contributions they receive on non-directly informative advertising. This paper shows that: (1) a separating equilibrium exists in which the group contributes to a candidate only if the insider information about that candidate is positive; (2) although voters are fully rational a ban on campaign advertising can be welfare-improving; and (3) split contributions may arise in equilibrium (and should be prohibited)

Topics: HB Economic Theory, JA Political science (General)
Publisher: Centre for Economic Policy Research
Year: 1999
OAI identifier: oai:eprints.lse.ac.uk:5218
Provided by: LSE Research Online
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