Endogenous party formation in a model of representative democracy

We extend the citizen candidate framework by allowing for endogenous party formation. When a party is formed, any member of that party that wants to be a candidate in the election, first has to run in the primary election of her party. We show that in equilibrium one left-wing and one right-wing party will be formed. Also, there may be a range of tiny centrist parties. At most one group of extreme citizens may not be a member of any party. For each party, at most one candidate runs in its primary election. There is a range of equilibria in which one candidate runs in the general election, but we find a unique two-candidate equilibrium. We thus show that allowing for parties to form severely restricts the range of possible equilibria in the citizen candidate model.