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Campaign advertising and voter welfare

Prat, Andrea (1999) Campaign advertising and voter welfare. . Centre for Economic Policy Research (Great Britain), London, UK.

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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).

Item Type: Monograph (Discussion Paper)
Official URL: http://www.cepr.org
Additional Information: © 1999 Andrea Prat
Divisions: Economics
STICERD
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JA Political science (General)
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
M - Business Administration and Business Economics; Marketing; Accounting > M3 - Marketing and Advertising > M37 - Advertising
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
Date Deposited: 02 Jun 2008 09:16
Last Modified: 15 Sep 2023 22:47
URI: http://eprints.lse.ac.uk/id/eprint/5218

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