We present a theory of dynamic coalitions for a legislative bargaining game in which policies can be changed in every period but continue in effect in the absence of new legislation. We characterize Markov perfect equilibria with dynamic coalitions, which are decisive sets of legislators whose members prefer to continue the current policy rather than change to another policy. The policies supported by dynamic coalitions satisfy necessary and sufficient existence conditions of internal stability and exclusion risk. Dynamic coalitions can be minimal winning or surplus and can award positive allocations to non-coalition members. The range of attainable dynamic payoffs is characterized, and the policies supported can be efficient or inefficient. Vested interests can support policies that no legislator would propose if forming a new coalition. If uncertainty is associated with policy implementation, a continuum of policies are supported. These equilibria have the same allocation in every period when the coalition persists. Dynamic coalitions also exist in which members tolerate a degree of implementation uncertainty, resulting in policies that can change without the coalition changing.
