Political campaign spending ceilings are purported to limit the incumbent's ability to exploit his fundraising advantage. If the challenger does not have superior campaign effectiveness, in contrast to conventional wisdom, we show that the incumbent always benefits from a limit as long as he has...

This paper completes Meirowitz (2008) by analyzing the effect of a cap on political campaign spending in an environment where voters have initial preferences over political candidates. The policy implications are starkly different from the previously analyzed case where voters are indifferent...

With politician preferences over policy outcomes, the effect of a contribution cap with monetary penalties for exceeding the cap is starkly different from the case with an indifferent politician. In contrast to Kaplan and Wettstein (AER, 2006) and Gale and Che (AER, 2006), a cap is never neutral...