This study investigates the determinants of party system fragmentation in new democracies by analyzing the interaction between social diversity and electoral rules in Chile. Drawing on a comprehensive dataset of 5,301 district-level elections conducted between 1989 and 2023, we find that ethnic fractionalization shapes the effective number of vote-winning parties, but its impact is strongly mediated by district magnitude and other institutional mechanisms. While ethnic diversity amplifies fragmentation in permissive systems, significant variation is observed across electoral regimes due to contextual factors such as apparentment coalitions and concurrent elections. These findings challenge the universal applicability of existing theories, which often rely on data from consolidated democracies, by highlighting the importance of local and institutional dynamics. In doing so, this study advances a more nuanced understanding of party system fragmentation in new democracies and identifies promising directions for future research. These include exploring the scaling of local cleavages into national divisions, the strategic overlaps in parallel electoral systems, and the temporal dynamics of institutional adaptation.
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