New political parties are mushrooming in nooks and corners of India. Many die an early death and many have proceeded to change the political landscape of India. This is a phenomenon that has had an disruptive effect on the Indian politic and regional or niche parties are forming governments since the late 80s. A common question that arises is-are regional and niche political parties good for the Indian electorate? It is a debatable question. This article is an attempt to study phenomenon in competitive behavior, Game theory and draw analogies between them and Indian politics. And see if the known models of competitive behavior can adequately answer some of the questions about regional/marginal parties in India.

It will helpful, if the reader has some shopping experience to follow competitive behavior. Product producers compete in markets to sell their products. The consumers/customers in the market buy these products. Typically as the price of a product decreases, the demand for the product increases. Markets are playgrounds where competitors compete/play for the customer’s approval. Can markets be compared to a thought and action leadership activity like political leadership? Probably not. But competitive behavior in market competitions can be likened to competitive behavior witnessed in electoral competition.

There are different kinds of market competitions and our first step is associating the right kind of competition to our elections. Let us consider a few kinds of market competition with some examples before we go further..

1. Tomato market in a vegetable bazaar in India (Perfect competition-Commodity market)

There is not much difference between tomatoes from one shop to another. So Customers also are not particular about tomato from one shop over another. None of the neighboring shop keepers can set a higher price for the tomato than the other (as every customer will got to the cheaper priced neighbor). None of the shops have a big share of the tomato sales in the whole market. Therefore no tomato vendor has any control over the market.

2. Electricity companies/boards of India (Winner-take-all competition or Monopoly market)

The government owned company controls the market; decides the price of electricity and no one else can sell in the market. It requires a lot of money and political power to create electricity or buy electricity and sell them in a profitable manner. As small companies don’t have it, we can’t expect them to start supplying electricity to your neighborhood in the near future. As the electricity company is not expecting any competition from outsiders, it is not motivated to serve you consistently or with high quality. Equivalent governance would be dictatorship like that of Zia-ul-Haq in Pakistan and obviously would not fit Indian democratic election scenario.

3. Soft drinks market (Oligopolistic competition with few players)

Pepsi and coke control over 80% of market. These two companies have significant control over the direction of the market in terms of price, quality and taste. It is not easy to enter into the market as it needs a large investment and can expect the big players to crush you with competition. A customer might prefer Coke or Pepsi strongly and will only switch with much persuasion.

4. Cellphones market (Oligopolistic competition with many players)

Nokia, Motorola, Sony, LG and Samsung control over 80% of market. The rest of the market has many small players. Different customer have different tastes. People who want cool phones prefer iphone, music lovers like Sony, Business users like Blackberry, value buyers like Nokia etc. It is still not easy to enter into the market as it needs a large investment and we can expect the big players to crush you with competition.

Let’s draw some comparisons between markets and electorates. Electorate is essentially a market where players compete for votes and winner is decided by the largest market share.

Equivalent words in Market competition and Electoral competition

Total Market Size= Voting Population

Producer=Political Party

Number of Quantity Purchased=Number of votes polled

Market Share of a company=Votes in Favor of a party

Price of Product= Effort needed to vote for a party and in this case the price/effort is same between all political parties.

Customer Perception of a product=Belief of a voter on election promises/manifestoes/values of a party

Each voter in India has only one vote and can only vote for one party at time (This is like having an environment where a customer can only buy one product at a time). He can also choose not to vote for any party. (Note: Let’s not consider election rigging for now) Also voters have individual preferences or different tastes. For example, one voter might prefer a religious party like Muslim League; another might prefer a local party like DMK or TDP or a workers’ party like Communists. Also a party can only offer one product to the customers unlike companies who can sell multiple products at same time. So what is the product? The product offering is the government offered by the political party, if it gains majority market share.

A key thing about elections is that customers don’t get to make decisions about governance through elections. But they get to choose a person who will then make decisions. Whether a politician delivers on his promise is obviously unpredictable and specific to the politician. So you can ask me, how can you predict the outcome of this system without knowing what the politician will do? In the short run, I can’t. This is like a scenario if I buy a sweet chocolate brand and the product does not turn out to be sweet as expected. But in the long run, the market will adjust itselves and after a period the brand wont be perceived as sweet anymore or the politician will not be perceived as honest anymore. My focus is on providing a general (necessarily not exactly accurate models of reality), but not overly simplified model, taking into account the fundamental characteristics of the electorate.

The winner of each election on a specific day can be considered the equivalent of the winning company in terms of market share at the specific day. A key difference between companies and political party competition is the time of the market share. Customers buy products throughout the year to decide the market share for that year but voters vote (buy a product) only once in five years. And the market share on the specific day determines their fate for the next five years.

I know you must be getting tired; we are one last step before we draw conclusions based on our analogies. So what sort of market is the TN and Indian electorate? We have two major parties in TN who garner around 30% votes each. The remaining voters vote for DMDK, Cong, and Communists etc. Obviously, the two major parties have power over the market. They increase or decrease their electoral share by coalition with other parties, announcing free schemes. The consumers have specific electoral tastes for national parties, local parties, caste parties and communist parties. This does not mean they will vote for that party only. Some customers might switch parties based on the value offering made by the competitors. Each voter in each market niche might have two categories: Strong Loyalists and weak loyalists. Weak loyalists can be easily persuaded compared to strong loyalists. And there is a huge chunk of switchers.

National and TN elections analogies

TN election competition is clearly a market competition like Coke-Pepsi (oligopolistic competition) with two major players and multiple smaller players with high entry barriers and clear economies of scale. But we see a pattern that where the market share of top two players reducing due to market entry and poor current offerings.

Indian Loksabha competition is clearly a market like Cellphones (oligopolistic competition) with many major players and multiple minor players. Since we have chosen our model, let us apply game theory and outcomes of oligopolistic competition to guesstimate outcome of TN and Indian electorate.

PS: In the essence of time and reader interest many theories that were considered in drawing the analogy were not explained in detail. Some factors considered in finding the right market match are entry barriers, product differentiation, consumer tastes, market share concentration, market capacity or population, Economy of scale, nature of demand, transparent pricing

Tags: ADMK, Cong, DMK, Politics, Regional, Tamil