We introduce a non-domestic government into the analysis of electoral competition with special interest groups. The non-domestic government sets its policy to infl‡uence the electoral prospect of candidate it prefers through special interest groups. The interest groups make contributions and vote directly for their aligned political parties. In the context, the determinants that the external government could have a role in electoral outcome of domestic politics are investigated. The determinants include the extent of affected interest groups, the bene…fits offered to interest groups, and the fraction of informed voters. Using the 2012 Taiwan presidential election data, we find evidence supporting that the party who advocates cross-strait trade is more likely to lose presidential...[ Read more ]

We introduce a non-domestic government into the analysis of electoral competition with special interest groups. The non-domestic government sets its policy to infl‡uence the electoral prospect of candidate it prefers through special interest groups. The interest groups make contributions and vote directly for their aligned political parties. In the context, the determinants that the external government could have a role in electoral outcome of domestic politics are investigated. The determinants include the extent of affected interest groups, the bene…fits offered to interest groups, and the fraction of informed voters. Using the 2012 Taiwan presidential election data, we find evidence supporting that the party who advocates cross-strait trade is more likely to lose presidential election when more interest groups may suffer from the Economic Cooperation Framework Agreement.

Key Words: Electoral Competition, Special Interest Groups, Bilateral Trade, Economic Cooperation Framework Agreement

JEL Codes: D72, D78, F14