Yardstick competition to tame the Leviathan

This papers analyzes the disciplining role of elections under asymmetric information, when voters can rely on relative performance evaluation to tame a Leviathan. When elections are held in different regions, voters are able to reduce political rents below the Leviathan level by retrospective voting strategies. The paper compares a multi-candidate model with a two-party system with either independent or coordinated policies in the various jurisdictions. In general, voters prefer the multi-candidate system. However, the disciplining ability of voters under the two-party system is strengthened if each party has a uniform leadership that determines policies in all regions.