Endogenous formation of political parties

We consider a population of individuals characterized by their ideal points in the space of political programs. Each individual joins some political party, and the party program is determined according to a certain rule depending on the ideal points of its members. The utility function of any individual increases in the size of his party, and decreases as the distance between the party program and his ideal point increases. trast to the previous literature on endogenous formation of coalitions we, examine a model without side payments, do not fix the number of parties and consider a large (formally infinite) population. The latter assumption permits us to consider continuous distributions of individual ideal points and facilitates the formal analysis. We use game-theoretic solution concepts and study existence, uniqueness and computation problems for Nash equilibria. We also examine coalitional equilibria, that is such party structures where no new party can provide greater utilities for all its members. We find out the properties, in particular, the number of different coalitional equilibria and the number of parties at each equilibrium, depending on parameters of the individual utility function.