Extreme Parties and Political Rents

We study the rent-seeking behavior of political parties in a proportional representation system. In our model, the final policy choice of the parliament is a weighted average of parties’ policy positions, weights being their vote shares. An extreme party chooses a higher rent level than a moderate party in exchange for greater policy influence, except in some cases of unlikely distributions of parties. Moreover, political rents are not eliminated even with free entry, unless the entry cost is arbitrarily small