Abstract

I present a model of fund-raising in repeated elections where funds are raised to deter the entry of strong challengers, and to increase the probability of winning through campaign spending. The equilibrium relationship between war chests and incumbent strength is non-monotonic, because incumbents of moderate strength have an incentive to raise enough money to deter strong challengers and to save a large fraction of those funds for use in subsequent election, while stronger incumbents have less incentive to save. Thus, the savings behavior can mask the entry deterrence effect.