"The Trade-off between Public Financing and Activism in Party Coalitions", workingpaper SIEP, presentato alla XXIII Conferenza, Pavia

This paper presents a model of party coalition formation between policy-motivated activists and office-seeking opportunists. In this framework, I consider how changes in party valence and public financing of political parties shape the equilibrium inside coalitions. Results show that, in equilibrium, opportunists and activists have the same marginal rate of substitution between policy position and activists' contribution. An asymmetric worsening of one party's valence leads to divergence of its policy platform and a higher degree of activism. Furthermore, public financing of political parties drives activism or idealism out of politics. As a consequence, public financing is an important policy instrument to regulate the trade-off between the degree of activism in politics and the independence of political parties from lobbying. Besides, electoral platforms bend towards the policy position of the opposition when public financing is asymmetric.