Reach for the Stars: A Strategic Bidding Game
AbstractWe examine two-sided competition in a duopoly market for differentiated products. Downstream, the two firms compete in prices. Upstream, they compete in bidding to hire talent input and there is one unique superstar. The outcome depends on the downstream effect of only one firm employing the superstar. When this intensifies downstream competition, both firms are worse off than they would be if no superstar talent were available. When the hiring of the superstar softens downstream competition, both firms benefit, but a "winner's curse" emerges in which the firm winning the superstar talent earns less profit than its rival. Copyright 2001 by The London School of Economics and Political Science
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 68 (2001)
Issue (Month): 272 (November)
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- Peter A. Groothuis & Richard Hill & Timothy Perri, 2007.
"The Dilemma of Choosing Talent: Michael Jordans are Hard to Find,"
07-01, Department of Economics, Appalachian State University.
- Peter Groothuis & James Richard Hill & Timothy Perri, 2009. "The dilemma of choosing talent: Michael Jordans are hard to find," Applied Economics, Taylor & Francis Journals, vol. 41(25), pages 3193-3198.
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