Contests with size effects
AbstractIn this paper we analyze the structure of contest equilibria with a variable number of individuals. First we analyze a situation where the total prize depends on the number of agents and where every single agent faces opportunity costs of investing in the contest. Second we analyze a situation where the agents face a trade-off between productive and appropriative investments. Here, the number of agents may also influence the productivity of productive investments. It turns out that both types of contests may lead to opposing results concerning the optimal number of individuals depending on the strength of size effects. Whereas in the former case individual utility is u-shaped when the number of agents increases, the opposite holds true for the latter case. We discuss the implications of our findings for the case of anarchic societies and competition on markets.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 22 (2006)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/505544
Other versions of this item:
- Wolfgang Eggert & Martin Kolmar, 2004. "Contests with Size Effects," CESifo Working Paper Series 1346, CESifo Group Munich.
- Wolfgang Eggert & Martin Kolmar, . "Contests with Size Effects," EPRU Working Paper Series 02-04, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Wolfgang Eggert & Martin Kolmar, 2005. "Contests with Size Effects," Ifo Working Paper Series Ifo Working Paper No. 2, Ifo Institute for Economic Research at the University of Munich.
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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