This paper presents a formal model of tunneling and propping in a pyramidal ownership structure. Tunneling refers to controlling shareholders shifting funds from one firm to another in the same pyramid. Propping is tunneling that is done to save the receiving firm from bankruptcy. We compare the...

We extend the citizen candidate framework by allowing for endogenous party formation. When a party is formed, any member of that party that wants to be a candidate in the election, first has to run in the primary election of her party. We show that in equilibrium one left-wing and one right-wing...