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transaction, even on those terms, is worth-while.” Table 8 provides the two conditions under
which this result is in equilibrium.
Table 8 – Necessary conditions for the “party as hostage” equilibrium
b1. High coattails condition
X
p
> C
p
b2. Cheap threat condition
Y
e
< C
e
These two conditions are the inverted version of those in the collaboration equilibrium (in
Table 3), except that the spoils condition is not a consideration. The high coattails condition
states that spillovers from presidential performance are so big that it is worthwhile for the
party to support its president even if he does not pay back (since X
p
–C
p
> 0, i.e. the worst
that can happen if the party supports is still better than not supporting given the current
structure in which the bargaining takes place); then, potential spoils from office are not
necessary for the party’s choice of supporting its president. As a result, the party’s threat of
not endorsing its executive is not credible since the party would be worse off if it fulfills its
threat.
Once the party has chosen to support its president, the president should then decide to
pay back or not. If the cheap threat condition holds, presidents will then chose the latter
alternative. This condition states that the president’s costs from his party’s retaliation or from
associated externalities is either non-credible or does not represent a high cost for the
president relative to what he would have to pay back to his party (Y
e
< C
e
). Hence, executives
can afford not to reciprocate, either fully or partially. The president is therefore able to get his
party’s support at a lesser cost as compared to the collaboration scenario. The party cannot
do much about it given this setting.
Convention