To fight or to govern? Political capital and electoral competition

Abstract We examine the endogenous development of specialized political capital and its use, by both governing and opposition parties, within a model of policymaking and electoral competition. The opposition party can use political capital to impede the governing party's policy agenda—to throw sand in the gears—but may make itself less electorally desirable in the process. We characterize conditions that give rise to different equilibrium patterns of political capital, including, among others, entrenched parties. Our results suggest that, in the special circumstances in which they arise, entrenched parties offer the voter a silver lining: In these cases, the incumbent and opposition parties have acquired different specialized political capital, and voters benefit from the opposition's developed capacity to curb the governing party's excesses. Due to the underlying conditions, policy outcomes are still poor, but, under relevant conditions, party entrenchment mitigates them, rather than exacerbating them as conventionally supposed.