By utilizing unique data capturing candidates’ ideological positions in Finnish municipal elections and leveraging exogenous changes in council size at different population thresholds as a proxy for electoral rule disproportionality and the expected advantage to the election winner, we identify a positive effect of council size on party cohesion. We propose the following mechanism: if a more diverse set of candidates is electorally appealing but less efficient in serving policy-related goals, parties face weaker incentives to maintain cohesion in institutional settings, such as smaller councils, which reward higher vote shares more generously.