A Spatial Bargaining Theory of Government Formation in Parliamentary Systems

Abstract

A theory of government formation in parliamentary systems is developed from a model incorporating policy-oriented parties with spatial preferences and a formation process in which parties are selected in sequence to attempt to form a government. A government is formed when the policy proposed by the party selected is sustained on a vote of confidence. The equilibria identify the government and the policy it will implement and depend on the configuration of preferences and on the government formation process. For example, in a political system with two large parties and one small party and in which one of the two large parties will be selected to attempt to form a government, the government will be formed by a large party with the support of the small party. The policy will reflect the preferences of the small party but will be closer to the ideal point of the large party.