Competitive elections, incumbency advantage, and accountability

I present a model of repeated electoral competition between two parties. A part of the electorate votes retrospectively and considers the amount of rent-seeking by the incumbent party, while the prospective voters follow probabilistic party preferences when casting their votes. I show that it is possible to distinguish the effects of incumbency advantage and electoral punishment on the minimum level of rent-seeking consistent with equilibrium. As long as there is electoral punishment for excessive rent-seeking, a larger incumbency advantage increases accountability by decreasing the minimum amount of rent-seeking consistent with equilibrium. The reason for this is that the larger the incumbency advantage is, the more important the result of the next election for all future election outcomes is. Consequently, the incumbent party is willing to give up more rent-seeking opportunities to improve its electoral prospects. Increased accountability due to a larger share of retrospective voters hurts the political selection aspect of elections because it enables the incumbent party to win without the support of the majority of the prospective voters