A SYSTEMS-APPROACH TO CAMPAIGN FINANCE IN UNITED-STATES HOUSE ELECTIONS

Previous research on campaign financing has been hampered by the persi stence of the simultaneity problem. In this article the authors attemp t to overcome this problem by specifying a comprehensive simultaneous model of congressional elections. Specifically, equations determining challenger political quality, candidate expenditures, and electoral ou tcomes are theoretically derived and then estimated as a single equati on system. Overall, this comprehensive simultaneous model fits the dat a relatively well. More importantly, the authors find that incumbent e xpenditures exert a significant impact on electoral outcomes. The marg inal impact of incumbent spending is not, however, the same for all in cumbents. Specifically, first-term incumbents receive a much larger ma rginal return on their expenditures than do multiterm incumbents. In f act, the marginal return on spending by first-term incumbents rivals t he marginal return on spending by challengers.