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Spatial Equilibrium with Entry

Palfrey, Thomas R. (1984) Spatial Equilibrium with Entry. Review of Economic Studies, 51 (1). pp. 139-156. ISSN 0034-6527.

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This paper examines spatial equilibrium in political competition when established parties choose their platforms competitively while rationally anticipating entry of a vote-maximizing third party. The resulting equilibrium is substantially different from the Hotelling "median" equilibrium. Established parties are spatially separated and third parties will generally lose the election. This provides one theoretical explanation for the stability of two-party systems. Namely that non-cooperative behavior between established parties can effectively prevent third parties from winning.

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Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:© 1984 The Society for Economic Analysis Limited. Received April 1, 1982. Accepted February 1, 1983. The author gratefully acknowledges conversations with Howard Rosenthal, Keith Poole, and workshop participants at Washington University and Carnegie-Mellon University. Two referees also made helpful comments. The usual exemption from blame applies.
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Record Number:CaltechAUTHORS:20160303-113443753
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Official Citation:Thomas R. Palfrey Spatial Equilibrium with Entry Review of Economic Studies (1984) 51 (1): 139-156 doi:10.2307/2297710
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:65021
Deposited By: Susan Vite
Deposited On:11 Mar 2016 00:21
Last Modified:22 Nov 2019 09:58

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