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I'm from Israel where the threshold for a parliamentary political party is 2/120. It does come with a cost.

Especially if you include parties with just a chance of passing the threshold, you theoretically more likely to find a party that represents your position. In practice though it encourages parties that represent certain ethnic/interest groups. It creates instability. It also means governments are alway coalitions where small parties are constantly threatening to bring down the government, especially the ethnic/interest parties with a narrower set priorities.

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