Distributive Politics, Number of Parties, Ideological Polarization, and Bargaining Power

Abstract

We build a theoretical model that provides a previously unexplored way of addressing the spending-negotiation process between a governing party and the parties in a legislature, one that offers new insights as to how political fragmentation, ideological polarization, and bargaining power—as well as their interaction with one another—affect government spending. We show that the effects of both political fragmentation and ideological polarization on government spending are expected to exhibit systematic differences across regimes with different institutional features as pertain to the legislative budgeting process determining the balance of power between the governing party and the legislature. We also show that the effect of political fragmentation on government spending may be intermediated by the degree of ideological polarization. Our results allow us to better understand the existing empirical evidence and suggest new unexplored hypotheses that need to be addressed empirically.