We evaluate the causes and consequences of pre-electoral coalitions (PECs). In Finland, local elections use open-list PR, and parties may form joint lists. We document that PECs are more common between parties of equal size and similar ideology, and when elections are more disproportional or involve more parties. Using both difference-in-differences and density discontinuity designs we show that voters punish coalescing parties, especially if they are ideologically diverse, and also respond to PECs by targeting personal votes strategically. Moreover, small parties become more likely to acquire political leadership positions. Finally, PECs seem to be formed also with the particular purpose of influencing the overall distribution of political power: they lead to more dispersed seat distributions and prevent absolute majorities in close elections. Our findings shed light on the boundaries of political parties: voter ideology and electoral rules create natural boundaries for the parties, yet party formateurs also consider wider impacts.
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