Ideologies, status quo, and parties' outside options in parliamentary politics. (September 2016)

• Record Type: Journal Article
• Authors: Tsai, Tsung‐Sheng; Yang, C. C.
• Is Part Of: International journal of economic theory. Volume 12:Number 3(2016:Sep.)
• Page Start: 279
• Page End: 297
• Publication Date: 2016-09
• Subjects: status quo -- outside option -- government formation -- parliamentary system; Economics -- Periodicals; 330.01
• DOI: 10.1111/ijet.12094
• Languages: English
• ISSNs: 1742-7355

Abstract

Abstract: This paper discusses the effect of the status quo policy versus parties' "outside options, " which are defined as the benefits when parties are not in government, on the determination of the political equilibrium in parliamentary politics. As the value of outside options increases, the status quo becomes less important relative to outside options in terms of the parties' bargaining strength. It is shown, among other things, that if the value of outside options is intermediate, two extreme parties may form a "disconnected coalition" in equilibrium; and if the value of outside options becomes sufficiently high, the status quo no longer maintains its grip on outcomes and the median‐voter theorem holds in essence.