Electoral rivalry and financial campaign contributions: The case of US Congressional elections

Abstract

Motivated by the observation that ideological political action committees (PACs) frequently contribute to multiple rival candidates within a given electoral race, we develop a model in which candidates for an elected office position themselves along a political spectrum in response to financial contributions, and strategically consider the positions adopted by their electoral rivals. This implies that PACs can affect a given candidate’s position both directly and indirectly. We describe the characteristics of the equilibrium of this game. In particular, we derive conditions under which the candidate’s positions are strategic complements/substitutes. We test the predictions of the model using data on the voting behavior of challengers who defeat incumbent legislators in the US House of Representatives, and find strong empirical evidence in support of strategic complementarity.