Bargaining In Legislature: Number Of Parties And Ideological Polarization

Abstract

This paper studies whether a government party always prefers to negotiate with another compact party rather than with many different parties in a legislature. We claim that the interaction between ideological polarization and number of parties plays an important role in this decision. We start by modeling two types of legislatures: The 2-parties legislature, in which the government party negotiates with another compact party; and the m+1-parties legislature, in which it negotiates with m>2 parties. Parties negotiate on both a public (ideological) and a distributive (private) policy. Our main result shows that the government party does not always prefer to negotiate in a bilateral situation. If the level of ideological polarization in the 2-parties legislature is high enough, it prefers to negotiate with m less polarized parties. We also find that if there are two legislatures with the same number of parties, the government party prefers to negotiate in that with the smallest level of ideological polarization.