This dissertation investigates the effects of institutional incentives such as electoral rules and the distribution of power between the president and the legislature on the development of the party system in the Russian Duma in the 1996-2003 period. In the first chapter of the dissertation, I identify empirically the structure of legislative voting coalitions in the 1996-1999 Duma, without assuming that they follow party lines. Using Bayesian discrete latent variable analysis and individual voting records, I investigate how legislators weigh pressures from the president, local constituencies, and the president. I find that: nominal party affiliation provides an inadequate description of the voting dynamics; electoral incentives and presidential patronage contribute to divides only within parties lacking coherent platforms; legislative institutions that encourage legislative affiliation but not electoral affiliation lead to the formation of opportunistic deputy groups divided into factions with dissimilar policy preferences. In the second chapter of the dissertation, I investigate the level of analysis from the aggregate to the individual legislator level. I investigate whether the MPs elected in single-member districts were responsive to the ideological preferences of their local constituencies. I construct a measure of district preferences over economic reform, the major dimension of political conflict, using individual-level survey responses and the district support for the parties competing in the party list tier of the parliamentary election. I estimate legislator ideal points as a function of district ideology, party affiliation, and individual-specific random shock. I find that legislators were responsive to district preferences only on salient legislation such as final passage votes and key votes. In the third chapter, I extend the analysis of legislative voting coalitions to the 1999-2003 Duma. I find that the extent to which legislative coalitions were party-based was conditional on the presidential approach toward majority building. Yeltsin's reliance on building cross-party coalitions by obtaining the support of individual deputies through patronage split legislative parties lacking strong labels and cohesive platforms. In contrast, Putin's unambiguous commitment to a strong presidential party and a stable party-based presidential coalition unified the legislative parties in the presidential coalition.