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THE ECONOMIC AND SOCIAL REVIEW
proportional representation with few and more encompassing parties
(Tabellini, 2000). Thresholds requiring a minimum percentage of voters to
obtain any seats in parliament are important instruments to reduce the
number of parties and make them more encompassing.
• Representatives from different districts or of different social groups are
likely to engage in logrolling and games of reciprocity to find majorities for
policies favouring their constituencies. Thus, plurality rule and propor-
tional representation with many small parties contribute positively to the
common pool problem. From this perspective, we should expect larger levels
of spending and larger deficits and debts in countries with plurality rule or
proportional representation with many small parties than in countries with
proportional representation and few, encompassing parties.
This leads us to the other aspect, competition. The need to gain a large
share of votes in a district under plurality rule is an important barrier to entry
for small parties. Political newcomers find it difficult to challenge incumbent
politicians, because they need a majority to succeed from the start. In contrast,
newcomers can win at least a small number of seats in parliament under
proportional representation. Political competition is, therefore, more intense
under the latter system, particularly when minimum vote thresholds are low.
If contestants use the election campaign to identify waste and point to
instances of rent-extraction, one can expect more intense competition to lead
to less waste and smaller rents. Thus, the consequences of weaker
accountability under proportional representation may be compensated by
more intense competition.
Empirical Evidence
Empirical research in this area has only recently begun. It is difficult, as
electoral rules often do not neatly conform to the stylised characterisations
used above. For example, in some countries with proportional representation,
voters can influence the rank individual politicians have on the party list. This
strengthens personal accountability under this electoral system. Japan’s pre-
1994 system of proportional representation allocated multiple seats to each
district, which created a huge incentive for distributive policies as a seat could
be won with as little as 14.2 per cent of the votes. More detailed characterisa-
tions are necessary to capture the full details of electoral rules.
Some interesting evidence exists nevertheless. Persson and Tabellini
(1999b) find that countries with plurality rule have smaller governments,
although this result is not statistically robust. Persson, Tabellini, and Trebbi
(2000) find that proportional representation is associated with higher levels of
corruption than plurality rule. If corruption is a proxy for rents, this confirms
the theory. Persson and Tabellini (1999b) also show that plurality rule