National Incumbent Research Articles

Second-order Economic Voting in Elections to the European Parliament

When examining citizens’ behaviour in elections to the European Parliament (EP), second order elections (SOE) and economic voting (EV) have overlooked each other as alien traditions. However, they should not be seen as incompatible: voters may use EP elections to support national incumbents but, at the same time, this support may be the result of an economic assessment. This paper blends both frameworks and finds that, even though EP elections are not intended to evaluate domestic politics, voters use them to reward or punish national incumbents (i.e. SOE) for the state of the economy (i.e. EV); a behaviour referred to here as ‘second-order economic voting’. The predominance of second-order EV is relevant for EU politics. If EP elections enhance national incumbents’ accountability while the European executive remains unacknowledged, this could be disturbing for European economic institutions.

Australian state and territory elections: regional incumbents matter

ABSTRACT Recent research is ambiguous about the status of Australian regional elections, seeing them as conforming to the second-order election model but also as affected by regional politics. We clarify this ambiguity, drawing on aggregate and individual level data to explore the variable impact of national and regional incumbents on regional elections. Although national incumbents seem to affect Australian regional elections, under some circumstances regional incumbent parties are able to electorally outperform their national incumbent counterparts. We suggest that Australia’s uncoordinated national and regional election cycles and federal distribution of policy responsibilities both help to focus voter attention on the performance of regional incumbents. The way that regional incumbents manage key policy issues, including Covid-19 in recent years, appears to matter for their electoral support, making Australian regional elections more than second-order events.

The EFTA Court’s Judgment in Telenor: A Missed Opportunity to Clarify the Scope of Product Aggregation under the Margin Squeeze Test

Margin Squeeze is a type of abuse of dominance which is not without its critics and the judgement by the European Free Trade Association (‘EFTA’) Court largely confirms the Court of Justice of the European Union’s (‘CJEU’) case law in the area. The case concerned Telenor, the national incumbent telecom operator in Norway. In December 2012, the EFTA Surveillance Authority (‘ESA’) conducted unannounced inspections at Telenor’s premises in Oslo. In February 2016, ESA sent a statement of objections to Telenor, which was followed up by a supplementary statement of objections in June 2019. On 29 June 2020, ESA delivered its final decision finding that Telenor had abused its dominant position and imposed fines of EUR 112 million. The abuse consisted of squeezing rivals’ margins when supplying stand-alone mobile broadband services (‘MBB’) to residential users in Norway. ESA’s decision found three separate infringements related to instances of margin squeezes imposed by Telenor on Network Norway AS from 1 August 2008 to 31 August 2010; on Ventelo AS from 1 January 2008 to 30 November 2010; and on service providers from 1 January 2008 to 31 December 2012.

Strategic interactions in mobile network investment with a new entrant and unobserved heterogeneity

I estimate a game of mobile network investment between national incumbents and a new entrant to shed light on the limited success of competition enhancing policies in Canada. I recover player-specific unobserved heterogeneity from bids for spectrum licences to address the unavailability of regressors required to identify incumbents’ responses to the new entrant’s decisions. I find that incumbents benefitting from important economies of density is a plausible explanation for policies’ limitations. I then evaluate the equilibrium effect of subsidizing the new entrant’s transceivers and find that this counterfactual policy increases its investment while only slightly modifying incumbents’.

Corruption victimization and anti‐incumbent voting

AbstractDo citizens punish elected politicians for corruption carried out by unelected bureaucrats? Most studies of corruption punishment focus on accusations against politicians. We argue that the direct, and therefore undeniable, experience of corruption at the hands of street‐level bureaucrats will lead citizens to punish national incumbents. We explore whether this punishment of corruption is mitigated in circumstances where voters believe that politicians have less control over bureaucrats. We combine cross‐national survey data on corruption victimization and political behavior in a sample of 60 countries from Africa and Latin America. We find a robust, negative effect of personal corruption victimization on vote intention. Surprisingly, we do not identify any significant country‐level predictors of the strength of this relationship, nor do we find evidence of systematic differences in how copartisans respond to bureaucratic corruption relative to noncopartisans. Our paper contributes to the growing literature on how interaction with street‐level bureaucrats drives political behavior.

The neighbourhood effect in economic voting: the association between local unemployment figures and national economic perceptions and incumbent voting in Belgium, 2009–2019

ABSTRACT While economic voting theory assumes that voters respond to economic conditions, critics have argued that most voters lack an adequate understanding of key national economic indicators. In this paper, we investigate the occurrence of a neighbourhood effect, where citizens can observe unemployment levels in their own local communities. Using both official statistics and survey data of three recent election studies in Belgium, we assess whether local unemployment levels are associated with the assessment of the national economy, and incumbent voting. While the results show that the local unemployment level is strongly associated with the assessment of the national economy, results regarding a direct association with supporting incumbent political parties are mixed. We argue that the neighbourhood effect is an important mechanism in economic voting, as citizens react to a neighbourhood effect in their assessment of the state of the national economy.

Economic voting in multi-level contexts: Evidence from Kerala and West Bengal in India

What determines electoral support for national incumbent parties and state-level challengers in sub-national pro-poor contexts? Based on survey data from the Indian states of Kerala and West Bengal, collected prior to the 2019 national election, we find that voters were more (less) inclined to vote for the sub-national incumbent relative to the national incumbent if their household economic conditions were perceived to have improved (deteriorated) relative to national economic conditions. Our findings indicate that voters in these settings correctly assume that the sub-national incumbent cannot be held responsible for changes in national economic conditions, but, at the same time, the existence of a strong welfare state at the sub-national level creates expectations that the sub-national government is responsible for personal welfare. Hence, the national election is used to assess the economic performance of both the sub-national and the national incumbent.

The political economy of health epidemics: Evidence from the Ebola outbreak

This paper investigates whether political incentives affect the government's response during a health epidemic and the subsequent effects on citizens' voting behavior. Leveraging novel data, I study this question in the context of the 2014 Ebola outbreak in Liberia. The national incumbent government appropriately prioritized the allocation of resources to villages affected by the epidemic. By building a spatiotemporal epidemiological model that estimates the ex-ante optimal allocation of relief efforts, there is also evidence that resources were misallocated toward electoral swing villages. Instead, no resources were diverted toward core supporters or co-ethnic villages. Voters, in turn, reacted by rewarding the national incumbent party in areas where additional resources were misallocated.

Quo vadis, international long-distance railway services? Evidence from Central Europe

International railway passenger services have seen considerable changes in Europe over the past few decades. Using international railway connections within and reaching outside the V4 countries (the Czech Republic, Hungary, Poland, Slovakia) in 1990–2019 as a sample, our paper explores trends and patterns in that matter in Central Europe. We have found that the characteristic focus on relatively very frequent short or medium-distance connections using the best equipped railway corridors – paralleled by a considerable reduction of the remaining services – has also been clearly in evidence in this part of the world. However, trends and patterns in Central Europe are not necessarily a mirror image of what has occurred in Western Europe. For instance, although a considerable shortening of travel times has indeed been observed, it has been achieved – characteristically – thanks to the improved permeability of state borders after the enlargement of the EU in 2004, with only moderate improvements to infrastructure being made. Central Europe therefore seems to be the prime example of an area in which contextual, political and geopolitical factors are the keys to understanding the dynamics of changes in transport systems. On the other hand, evidence from this region may give rise to some reflections on the possible roles for the European long-distance rail transport in the future. To begin with, our results show 800 km to be the threshold beyond which the competitive position of rail becomes significantly lower. Secondly, competitive pressure from innovative newcomers (Regiojet, LeoExpress, Arriva) clearly makes national incumbents more flexible and pro-active. Thirdly, the noticeable spatial re-orientation of international railway connections from the V4 countries towards Vienna and Munich (at the expense of Berlin) that we have observed is partly related to the appeal of these cities as multimodal gates with excellent locations within European transport networks. It would therefore seem that the railways in this part of Europe have been attempting to become an integral part of the international multi-modal long-distance transport system.

Partisan Federalism and Subnational Governments’ International Engagements: Insights from India

AbstractThis article situates the international activities of subnational governments in India within the broader political economy of federalism. It argues that the nature and the extent of subnational states’ engagements in international affairs are a function of the partisan political relationship the state incumbents have with the national incumbents. The article takes a mixed methods approach. An analysis of 1,153 episodes of international engagements of India’s states from 1996 to 2017 reveals that shifts in foreign policy engagement of selected state governments primarily reflect alterations in the subnational incumbents’ political affiliation with the Union government. Several qualitative case studies shed light on how the central government’s inclusion of subnational governments’ perspectives and representatives in foreign affairs is highly partisan and profoundly political. Therefore, the Indian case reveals how subnational diplomatic interactions merge domestic and international politics.

Institutional entry barriers and spatial technology diffusion: Evidence from the broadband industry

AbstractResearch SummaryIn this article, we examine the effects of institutional entry barriers on incumbent firms' technological diffusion. In particular, we combine new institutional economics and nonmarket perspectives to build a theoretical framework about the impact of local entry barriers on community‐based firms and how they affect incumbent firms' technology diffusion. We theorize that the local institutional environment reduces technology diffusion because of reduced entry threat, but incumbents' capabilities and the intensity of competition from private firms may moderate this effect. We exploit the exogenous geographical variation of alternative entry regimes in the U.S. broadband industry to causally capture incumbents' technology adoption strategies. This article suggests that local institutional contexts that advantage private firms over nonprivate firms may generate divergent spatial technology diffusion processes within and across firms.Managerial SummaryIn this article, we examine how firms adjust their technology adoption to their local institutional environment. We argue and empirically show that local institutions that restrict new entry by nonprivate firms reduce private incumbents' technology diffusion but the effect depends on firm and market characteristics. In particular, national incumbents are more resilient because of their capabilities while local competition by private firms moderates the negative effect of reduced entry threat. We use the context of the U.S. broadband industry to examine the effect of local institutions that provide advantages to some firms over others. Our results suggest that managers need to adjust their technology adoption strategies to the local regulatory environment taking into account firm's capabilities and market competition.

Favoring co-partisan controlled areas in central government distributive programs: the role of local party organizations

We analyze the non-contributory health insurance program (“green cards”) in Turkey with RDD (Regression Discontinuity Design) and show that more citizens receive green cards in municipalities controlled by the national incumbent party, AKP (Adalalet ve Kalkinma Partisi). Our explanation for the finding emphasizes the role of local party organizations and sub-national incumbency. Local government control provides additional resources to the party to strengthen its organization, which then helps the party to target the beneficiaries of central government programs like green cards more effectively. Theoretically, we join the literature that uncovers the significance of incorporating local actors into the analysis of central government programs. Our contribution lies in depicting the mediating role of political parties and their local organizations. Even in a highly centralized context like Turkey, parties’ informal role affects program implementation. Unequal access to free healthcare results from the asymmetry between national and opposition parties in how their local organizations interact with the central government.

Economic governance: Does it make or break a dominant party equilibrium? The case of India

Why do voters re-elect the same party for prolonged periods of time even when there are reasonable alternatives available? When and why do they stop doing so? Based on a quantitative analysis of elections between 1972 and 2014, we test the significance of ‘economic governance’ for the continuance and fall of one-party dominance. With data from India we show that, under a command economy paradigm, a national incumbent party sustains its dominance by playing politics of patronage, but in a marketized economy, state governments gain considerable scope in managing their economic affairs. This enables different state parties to create a stable pattern of support in states. As state-level effects cease to aggregate at the national level, the party system fragments. However, such an aggregation can re-emerge if a single party consistently delivers in the states which it governs.

The Political Economy of Health Epidemics: Evidence from the Ebola Outbreak

This paper investigates whether political incentives affect the government’s response during a health epidemic and the subsequent effects on citizens’ voting behavior. Leveraging novel data, I study this question in the context of the 2014 Ebola outbreak in Liberia. The national incumbent government appropriately prioritized the allocation of resources to villages affected by the epidemic. By building a spatiotemporal epidemiological model that estimates the ex-ante optimal allocation of relief efforts, there is also evidence that resources were misallocated toward electoral swing villages. Instead, no resources were diverted toward core supporters or co-ethnic villages. Voters, in turn, reacted by rewarding the national incumbent party in areas where additional resources were misallocated.

Regional elections in Italy (2012–15): Low turnout, tri-polar competition and Democratic Party’s (multi-level) dominance

ABSTRACTBetween October 2012 and May 2015, all Italian regions went to the polls to renew their assemblies and executives. In contrast to previous election rounds, only seven out of fifteen ordinary regions held their elections in (horizontal) simultaneity. For the first time, some ordinary regions held their elections in (vertical) simultaneity with the national or European election. The election results were somehow exceptional in three ways. First, they were affected by an extremely low level of turnout vis-à-vis previous regional elections and, in line with the second-order election model, vis-a-vis the 2013 general election. Turnout was, however, comparatively higher in the special status regions governed by dominant ethno-regionalist parties (Aosta Valley and South Tyrol); and in the regions that voted in vertical simultaneity with the national and (to a lesser extent) European elections. Secondly, in contrast to previous regional elections, competition for regional executives was (at least) tri-polar, following the pattern that emerged in the 2013 general election. Thirdly, in contrast to the predictions of the second-order election model, this round of regional elections did not punish the national incumbent. Indeed, the Democratic Party won fifteen out of twenty-one regional presidencies, taking nine of them from the centre-right. Finally, it is worth stressing that the combination of low turnout and tri-polar competition, in conjunction with presidential executives and majoritarian voting systems, raises serious issues of democratic legitimacy, as most regional presidents are voted in office by between a fifth and a quarter of registered voters.

Passing the buck? Responsibility attribution and cognitive bias in multilevel democracies

This paper explores the effect of national partisanship and Euroscepticism on individuals’ causal responsibility attribution in European multilevel democracies. It is particularly focused on the average differences in responsibility attribution in federal and non-federal states, as well as in countries belonging to different European Union enlargement waves. Using a pooled dataset of the 2004, 2009, and 2014 European Election Studies, results show that when poor economic outcomes are at stake, partisans of the national incumbent in federal states are more likely to assign responsibility to regional governments following a blame-attribution logic, while this logic is absent in non-federal states. Likewise, Eurosceptic individuals are more likely to assign responsibility to European authorities when they hold negative views of the economy and they belong to countries that have been European Union members for a longer period.

Deadlock in corporate governance: Finding a common strategy for private telephone companies, 1978–1998

This paper looks at how a group of small, incumbent private telephone companies complied with the international convergence of market structures. The existing research has mainly focused on large national incumbents, assuming a transition to multinational enterprise. This development process is often associated with privatisation policies and various institutional factors. The article tests these assumptions using a case study of the network of Finnish local telephone companies. It looks at the development of an interfirm network, its perspectives on the different phases of the deregulation process, and how the network tried to regenerate itself but failed to form a unified corporate structure capable of mounting a common business strategy. The reason for this failure resembles the idea of governance inseparability: private telecom companies were committed to the objectives and form of a tried and trusted cooperation model, which no longer met the requirements of the competitive and increasingly liberalised business environment of the 1990s. This case demonstrates that the significance of both corporate governance and organisational development are, above all, related to the firm’s ability to regenerate itself.

Party Alignment, Political Budget Cycles and Vote within a Federal Country

We first study theoretically how intergovernmental relations affect political budget cycles (PBCs) within federal countries, introducing a national incumbent that favors aligned districts in a model where discretionary fiscal policy is subject to credibility problems. Then we analyze Argentina’s provinces during the 1985–2001 period. Unsurprisingly, aligned provinces where the governor belongs to the president’s party receive larger federal transfers (and have larger public expenditures) during the governor’s entire term, while provincial budget balances worsen in electoral years. We uncover an interaction effect by which unaligned provinces tend to worsen their budget balances more in electoral years. The sharpest result is that larger average federal transfers boost the vote for aligned governors. Two broad implications are that studies of subnational PBCs are biased by an omitted factor (discretional federal transfers), and governors unaffiliated with the president suffer a “Cinderella” effect at the polls which helps the president dominate national politics.

Pass the Buck If You Can: How Partisan Competition Triggers Attribution Bias in Multilevel Democracies

Voters’ ability to hold politicians accountable has been shown to be limited in systems of multilevel government. The existence of multiple tiers of government blurs the lines of responsibility, making it more difficult for voters to assign credit or blame for policy performance. However, much less is known about how the vertical division of responsibility affects citizens’ propensity to rationalize responsibility attributions on the basis of group attachment. While these two processes have similar observable implications, they imply markedly different micro-mechanisms. Using experimental and observational data, this paper examines how the partisan division of power moderates the impact of voters’ partisanship and feelings of territorial attachment on attributions of responsibility for the regional economy. Our analyses show that partisan-based attribution bias varies systematically with the partisan context, such that it only emerges in regions where a party other than the national incumbent controls the regional government. We also find that responsibility judgments are rationalized on the basis of territorial identities only when a regional nationalist party is in control of the regional government. Our results contribute to explaining the contextual variations in the strength of regional economic voting and more generally to understanding one of the mechanisms through which low clarity of responsibility reduces government accountability.

Welfare gains from utility reforms in Egyptian telecommunications

Utility sector reform spread across the developing world in the 1980s and 1990s. In Egypt, as in many cases, the pace and nature of reform has been challenged by a state-owned national incumbent. However, in the Egyptian telecommunications sector, rapid growth in the cellular market has overtaken the archaic fixed-line system. Hence, the national monopoly provider, Telecom Egypt (TE), has been stripped of its market power as the market diversified. The implemented public sector reform and privatization placed efficiency pressures on TE resulting in improved outcomes for a range of stakeholders, consumers, workers, and the government, including reduced prices, increased access, and improved service quality. This experience offers lessons for policy makers and researchers about liberalization in the face of entrenched state interests. However, there are nuances in the findings relating to market type, that is, fixed-line versus cellular, residential versus non-residential, and national versus international. Despite attempted improvements, direct competition in its retail market has led to deterioration in TE's financial performance, although this has been partially offset by its monopoly supply of an essential input and a degree of protection provided by the regulator sympathetic to TE. The evidence from this case study supports the concept of a staggered introduction of competition. However, protecting inefficient market insiders, be it firms or workers, is always at the expense of potentially more efficient outsiders.