Political entrepreneurship and bidding for political monopoly

An analytical framework for dealing with political entrepreneurship and ref orm is proposed which is based on some new combinations of Schumpeterian po litical economy, an extended version of Tullock's model of democracy as fra nchise-bidding for natural monopoly and some basic elements of New Institut ional Economics. It is shown that problems of insufficient award criteria a nd incomplete contracts which may arise in economic bidding schemes, also - and even more so - characterise political competition. At the same time, t hese conditions create leeway for Schumpeterian political entrepreneurship. The same is true for various barriers to entry in politics. These barriers affect a trade-off between political stability and political contestabilit y which will be discussed with special emphasis on incentives and opportuni ties for political entrepreneurship in the sense of risking long-term inves tments in basic political reforms.