Electoral competition with entry under non-majoritarian run-off rules

I study electoral competition between established parties under threat of entry by a challenger under non-majoritarian run-off elections. In contrast with classical majoritarian run-off elections, I show how non-majoritarian rules can facilitate two-party systems, including those in which the established parties deter the challenger's entry by adopting differentiated platforms. I also show that non-majoritarian run-off rules may facilitate entry deterrence by established parties in settings where a plurality rule cannot. My results provide a striking counterpoint to a conventional wisdom-embodied, most notably, in Duverger's Hypothesis-that associates run-off rules with multi-party systems. Finally, they provide a theoretical foundation for patterns of electoral competition observed in countries using non-majoritarian rules that contradict this conventional wisdom.