In this manuscript, the author models the recent history of relations
between the ruling Kuomintang (KMT, or the Nationalist Party) and its local
factions an an example of a "three-persons, sequential, incomplete information
game". By utilizing the solution concept of "sequential equilibrium" it is
demonstrated that the KMT is constrained in the use of "signaling" as its
strategy to dominate factions in local politics. However, strategic signaling
can be most powerful when the "election cost" to the KMT is perceived to be
within a certain range. In this case, the KMT has its best opportunity to
manipulate local factions such that the KMT's political dominance can be
preserved through the wellknown phenomenon of "faction alternation" in Taiwan's
local politics.