Coase-Sandor Working Paper Series in Law and Economics

Outside Influence on Democratic

Saul Levmore


The 2019 Indian general election, and especially the enormous amount of money spent on campaigning and befriending voters during the election season, has drawn attention to the question of whether and when “outside” support (in the form of money and other assistance) from companies and persons not directly involved in an election should be forbidden, tolerated, or even encouraged. Common reactions to outside influence are inevitably inconsistent, even if we account for the fact that losers are likely to decry the outside influence that advantaged the winners or, more likely, the incumbent party expected to win. A novel approach, influenced by law-and-economics and public choice theory, compares the value of each democratic jurisdiction deciding its own rules, with one that makes room for significant externalities across borders and among constitutions. Money transfers, or even vote buying, might make citizens better off than a constitutional or legislative rule allowing only nonmonetary transfers. Forbidding all outside influence is impossible as a practical matter and in a way that is consistent with free speech and other democratic values. Some money transfers might also be a means of taking intense preferences into account. The most important result is that common intuitions are likely to be wrong and are, in any event, certainly inconsistent.