Political Entry, Public Policies, and the Economy.

This paper presents a theory of competition for political leadership between incumbent leaders and their challengers in which the possible equilibrium political market structures range from pure monopoly (unchallenged dictatorship) to perfectly competitive (ideal democracy). Leaders compete sequentially and are constrained by the threat of ?entry,?or their ability to tax (or both), so that a political leader with no challengers may nonetheless implement policies in the public interest. We offer economic interpretations of why some elections are uncontested, why there are good and bad dictators, why democratic countries are associated with higher wages, why resource abundant countries tend to be nondemocratic, and how technological change affects political development. By focusing on the incentives for political entry, we show how trade sanctions and other policies designed to promote democracy may actually have the unintended consequences of discouraging political competition. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]