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Trading Portfolios: The Stability of Coalition Governments

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The Political Economy of Governance

Part of the book series: Studies in Political Economy ((POEC))

Abstract

In this chapter, we explore the question of how the inclusion of a niche party influences the allocation of ministries in coalition governments. In particular, we ask whether niche parties have an advantage because of higher values that they place on certain ministries that the other parties are less interested in. We provide a model where two parties are dividing a portfolio of three ministries, and compare the stable coalitions formed by two mainstream parties with those formed by a mainstream party and a niche party. The results show that in some cases the niche party is able to form stable coalitions with higher payoffs than the mainstream party. This advantage, however, makes the niche party a less desirable coalition partner because the latter cannot commit not to ask for better payoffs.

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Notes

  1. 1.

    This is along the lines of Meguid’s (2005) definition of niche parties.

  2. 2.

    See, for example, Browne and Franklin (1973) and Schofield and Laver (1985).

  3. 3.

    For a comparison of Gamson’s hypothesis, Baron and Ferejohn model, and demand competition model in an experimental setting see Frechette et al. (2005).

  4. 4.

    It is trivial to show that any coalition where one of the parties does not get any ministries is not stable.

  5. 5.

    Note that for two-party coalitions the definitions of M 1 stable and M 2 stable will be the same because an objection can be made against only one party.

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Author information

Authors and Affiliations

  1. Department of Political Science, Washington University, 1 Brookings Drive, Saint Louis, MO, 63130, USA

    Betul Demirkaya & Norman Schofield

Authors
  1. Betul Demirkaya
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  2. Norman Schofield
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Corresponding author

Correspondence to Norman Schofield .

Editor information

Editors and Affiliations

  1. Department of Political Science, Washington University in Saint Louis, Saint Louis, Missouri, USA

    Norman Schofield

  2. Faculty of Economics, University of Vigo, Vigo, Spain

    Gonzalo Caballero

Appendix

Appendix

Proof of Proposition 1

Consider the coalition ABB. To any objection that Party A can make, Party B can respond by making the same offer to Party C, and vice versa. Consider the coalition ABA. Party B can object with BCC against which Party A does not have any counter objection. Consider the coalition AAB. Party B can object with CBC against which Party A does not have any counter objection. The cases for coalitions BAA, BAB, and BBA are symmetrical.

Proof of Proposition 2

The proof for the stable coalitions formed by parties A and B is the same as the proof for Proposition 1.

For the stable coalitions formed by parties A and C:

  1. 1.

    [(a)]

  2. 2.

    Consider the coalition ACC. To any objection that Party A can make, Party C can respond by the counter objection BCC. To any objection that Party C can make, Party A can respond by making the same offer to Party B.

  3. 3.

    Consider the coalition CAA. To any objection that Party A can make, Party B can respond by the counter objection CBB. To any objection by Party C, where Party C gets two ministries, Party A can respond by making the same offer to Party B. If x < y, however, Party C can also object with coalition BCB against which Party A has no counter objection. Similarly, if z < y, party C can object with coalition BBC against which Party A has no counter objection.

  4. 4.

    Consider the coalition CAC. To any objection that Party C can make, Party A can respond by making the same offer to Party B. If Party A objects with ABB, Party C can respond by the counter objection BCC; however, for this counter objection to be possible we should have a ≥ b + c and y ≥ x. Alternatively, Party C can respond by the counter objection BCB if y ≥ x + z. If Party A objects with BAA, Party C can respond by the counter objection BCC. However, for this counter objection to be valid, we should have y > x, which is an easier condition than the ones listed in the Proposition. Finally, if Party A objects with ABA or AAB, Party C can respond by the counter objection CBC.

  5. 5.

    Consider the coalition CCA. To any objection that Party C can make, Party A can respond with the counter objection BBA. If Party A objects with BAB, Party C can respond by the counter objection BBC; however, for this counter objection to be possible we should have z ≥ x + y. The conditions for responding to other possible objections by Party A are easier to satisfy. Party C can respond to objection ABB with BBC if z ≥ x + y or with BCC if a ≥ b + c or z ≥ x. It can respond to objections ABA with BCC if z ≥ x. Finally, it can respond to objection AAB with counter objection CCB.

  6. 6.

    Consider the coalitions ACA and AAC. Party C can object with BCC against which Party A cannot have any counter objection.

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Demirkaya, B., Schofield, N. (2015). Trading Portfolios: The Stability of Coalition Governments. In: Schofield, N., Caballero, G. (eds) The Political Economy of Governance. Studies in Political Economy. Springer, Cham. https://doi.org/10.1007/978-3-319-15551-7_9

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