The Effect of Endogenous Campaign Spending and Voter Heterogeneity on Candidates’ Vote Share: The Case of 2014 Taiwanese Local Elections

Published in under submission, 2020

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This paper addresses the effect of campaign spending on vote share by allowing campaign spending to be endogenous and including voter heterogeneity in the estimation. Using the BLP estimation (Berry et al., Econometrica, 1995) and the election data from Taiwan, empirical results show that the marginal effect of spending is larger for challengers than incumbents. The results also reveal that the effect of campaign spending on vote share is positive and significant for the elderly voters and the voters living in wealthy areas but negative for college graduates. The spending elasticity estimates vary across electoral districts and can be either positive or negative. The voters are found to be more responsive to the campaign spending by incumbents and the candidates of the Kuomintang.