We propose and structurally estimate a dynamic model of electoral competition that allows for strategic coordination between parties by way of common candidate nominations. In our model, holding office over time enables the incumbent party to (potentially) build an electoral advantage. Opposition parties (and voters) then face a stark dynamic tradeoff: a short-term ideology compromise via an electoral coalition offers the opportunity to remove the incumbent party from office, deplete its incumbency advantage, and thus level the electoral playing field in the future. This tradeoff provides a rationale for coalition formation in elections previously unrecognized in the literature. We take our model to data from Mexican municipal elections between 1987-2016 and show that electoral coalitions have been a significant instrument of democratic consolidation in Mexico.

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