The purpose of this paper is to view political candidates as products in a market competing over quality via advertising. Consequently, the Austrian argument against restrictions on product advertising can be applied to political markets as well. The foremost conclusion is a disproportionately negative effect of campaign finance restrictions on lesser-known incumbents and third-party candidates. A counterargument is also presented that campaign finance restrictions may solve a prisoner’s dilemma.
The author provides an initial test of these hypotheses with data from US Senate races occurring before and after the passage of the McCain-Feingold Act of 2002.
Empirical results show a strong incumbency advantage, but no disproportionate harm to lesser-known candidates or third parties from the passage of the act.
The paper provides a new perspective on the role of the political candidate and purpose of campaign advertising. The first pass empirics suggest, however, that only a major revision in campaign advertising rules could significantly alter the predictors of challenger vote shares.
