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Contests with Size Effects

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Author Info
Wolfgang Eggert ()
Martin Kolmar

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Abstract

In 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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Publisher Info
Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 2.

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Date of creation: 2005
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Handle: RePEc:ces:ifowps:_2

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Related research
Keywords: Size Effects; Contests; Anarchy; Competition.;

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Find related papers by JEL classification:
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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