Abstract
I analyze the postelectoral coalition formation process in a two-dimensional political environment. The two dimensions are the degree of a proportional tax rate and the degree of a group-specific public good. Parties are office-motivated and care instrumentally about policy. I analyze when stable coalitions exist and obtain that for that to occur office benefits should exceed a certain level. I analyze how this critical level and the set of policies implemented are affected by the income levels and the degree of diversity. For both office- and policy-motivated parties the same result holds, but the critical level might be lower for the latter.
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