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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

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Keywords: Contests; Non-price competition; Outsourcing;

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References

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Citations

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Cited by:
  1. Ben J. Heijdra & Jenny Ligthart, 2006. "The Transitional Dynamics of Fiscal Policy in Small Open Economies," CESifo Working Paper Series 1777, CESifo Group Munich.
  2. Khaled Bennour, 2009. "The value of rents and the likelihood of conflicts," International Review of Economics, Springer, vol. 56(2), pages 163-173, June.
  3. Forges, Françoise & Koessler, Frédéric, 2008. "Long persuasion games," Journal of Economic Theory, Elsevier, vol. 143(1), pages 1-35, November.
  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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