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Outsourcing in contests

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  • Frode Meland
  • Odd Straume

    ()

Abstract

We study ex post outsourcing of production in an imperfectly discriminating contest, interpreted here as a research tournament or a procurement contest for being awarded some production contract. We find that the possibility of outsourcing increases competition between the contestants, leading to higher total contest effort, if the contest winner is expected to obtain a sufficiently large share of ex post outsourcing rents. Under reasonable assumptions, outsourcing tends also to increase the number of active contestants, strengthening the case for outsourcing to increase total contest effort. If such effort is socially wasteful, outsourcing creates a welfare trade-off between ex ante and ex post efficiency. Copyright Springer Science+Business Media, LLC 2007

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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 131 (2007)
Issue (Month): 3 (June)
Pages: 315-331

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Handle: RePEc:kap:pubcho:v:131:y:2007:i:3:p:315-331

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Web page: http://www.springerlink.com/link.asp?id=100332

Related research

Keywords: Contests; Non-price competition; Outsourcing;

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References

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  13. Meland, F., 2000. "Unions and Market Integrations in Contests," Norway; Department of Economics, University of Bergen 1600, Department of Economics, University of Bergen.
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  16. Konrad, Kai A., 2005. "Silent Interests and All-Pay Auctions," Discussion Papers 2005/8, Free University Berlin, School of Business & Economics.
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  18. Stein, William E, 2002. " Asymmetric Rent-Seeking with More Than Two Contestants," Public Choice, Springer, vol. 113(3-4), pages 325-36, December.
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Citations

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Cited by:
  1. Forges, Françoise & Koessler, Frédéric, 2008. "Long persuasion games," Journal of Economic Theory, Elsevier, vol. 143(1), pages 1-35, November.
  2. Heijdra, B.J. & Ligthart, J.E., 2006. "The Transitional Dynamics of Fiscal Policy in Small Open Economies," Open Access publications from Tilburg University urn:nbn:nl:ui:12-199394, Tilburg University.
  3. Bennour, Khaled, 2008. "The Value of Rents and the Likelihood of Conflicts," MPRA Paper 15013, University Library of Munich, Germany.
  4. BOS, Olivier, . "How lotteries outperform auctions," CORE Discussion Papers RP -2321, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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