Abstract: We study party formation in a general model of collective decision-making,
modelling parties as agglomerations of policy positions championed by decision-makers.
We show that in the presence of economies of party size and a one-dimensional policy
space, players agglomerate into exactly two parties. This result does not depend on
the magnitude of the economies of party size or sensitively on the nature of the
individuals' preferences. Our analysis encompasses several models, including decision-making in committees with costly participation and representative democracy in which the legislature is elected by citizens, for a wide range of electoral systems
including plurality voting and proportional representation. The result implies that a
multiplicity of parties hinges on the presence of more than one significant political issue
or of diseconomies of party size.
JEL Classification: D70;D72