The name is absent

model that incorporates two key ideas. The first idea is that plurality rule gives an
electoral advantage to larger parties, since they are more likely to gain plurality
in each district. For this reason, strategic politicians have a strong incentives
to merge into a large party under plurality rule, whereas they prefer to splinter
in many smaller parties under proportional elections. This strategic behavior of
politicians has obvious implications for the type of government. Under plurality
rule, we are more likely to see governments supported by single party majorities,
whereas coalition governments are more likely under proportional rule.

The second idea is that single-party governments and coalition governments
differ in a crucial respect. When the government is supported by a single-party
majority, voters cannot easily discriminate between different politicians in gov-
ernment. Therefore, the main electoral conflict runs between government and
opposition. A coalition government allows voters to discriminate at the polls
between the coalition parties, and this creates electoral conflicts within the gov-
ernment coalition. As we have seen, that intra-government conflict induces higher
spending under both electoral rules.

To model these two ideas in a simple way, we have had to rely on simplifying
assumptions, restricting the feasible alliances among politicians and simplifying
the voters’ behavior. But we think that the main insights of the paper are ro-
bust to alternative modelling assumptions. Our simplifications enable us to study
a complete politico-economic equilibrium, which yields precise predictions on the
whole chain of causal effects, from electoral rule, to party structure, to type of gov-
ernment, to economic policy. Moreover, we obtain additional insights. According
to the theory, if electoral districts are homogeneous, the electoral rule influences
economic policy and type of government exclusively through its effect on party
structure. If the electoral districts are heterogeneous, party fragmentation and
coalition governments are likely to arise also under plurality rule.

Empirical evidence, based on the observed variation across parliamentary
democracies and across time in connection with electoral reforms, strongly sup-
ports the main theoretical predictions. Proportional rule is indeed associated with
more fragmented party structures, which in turn lead to more frequent coalition
governments, which spend more than single-party majority governments. More-
over, the electoral rule does not seem to exert direct influence on the type of
government, nor on the size of government spending. The chain of causation in
the data appears to coincide with the causal chain predicted by the theory.

The theoretical model also has other predictions, that we have not yet exploited
in the empirical analysis. In particular, political rents are predicted to be higher

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