ABSTRACT
Recent elections in India have drawn attention to the enormous amount of money spent on campaigning and befriending voters during the election season. An important question for India, Israel, the United States, and other countries that have experienced legal and illegal attempts to influence elections is 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. The inconsistency is heightened when one considers the common and accepted practice of “outsiders” influencing local elections in one democracy after another. 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.
