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The US is in a two-party system because its congressional elections are winner-takes-all. In a proportional representation system, where each party gets a number of representatives proportional to how many votes it got, smaller parties can exist, with a small but non-zero number of representatives. In a winner-take-all system, the only party that gets any representation at all in any given area is the one that gets the most votes, and in the long run that leads to just two parties.