The logic of party coalitions with political activism and public financing

This paper presents a model of party coalition formation between policy- motivated activists and office-seeking opportunists. In this framework, I con- sider how changes in party valence and public financing of political parties shape the equilibrium inside coalitions. Results show that, in equilibrium, op- portunists 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-o¤ between the degree of activism in politics and the independence of political parties from lobbying.