Constituency size and stability of two-party systems

This paper investigates how constituency size affects spatial competition in a two-party system with a new entrant. When the electorate is small, two-party systems are stable only if the following conditions hold: the candidates are neither too certain nor too uncertain about voters' preferences; competition is sufficiently costly; and the candidates have binding policy commitments. Moreover, whenever equilibrium exists in small constituencies, the two parties are considerably polarized. In contrast, when the electorate is large, two-party equilibrium obtains under a much wider set of conditions and exhibits low polarization. The Downsian prediction of two-party convergence and the Duvergerian prediction of plurality rule leading to a two-party system are more robust in larger electorates.