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Asymmetric Contests with General Technologies

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Author Info
Richard Cornes (School of Economics, University of Nottingham,)
Roger Hartley () (Keele University Department of Economics)

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Abstract

We investigate the Nash equilibria of asymmetric, winner-take-all, imperfectly discriminating contests, focusing on existence, uniqueness and rent dissipation. When the contest success function is determined by a production function with decreasing returns for each contestant, equilibria are unique. If marginal product is also bounded,limiting total expenditure is equal to the value of the prize in large contests even if contestants differ. Partial dissipation can occur only when infinite marginal products are permitted. Our analysis relies heavily on the use of ‘share functions’ and we discuss their theory and application. Increasing returns typically introduces multiple equilibria and requires an extension of share functions to correspondences. We describe the appropriate theory and apply it to the characterisation of all equilibria of contests employing the asymmetric generalisation of a widely-used symmetric contest success function.

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Publisher Info
Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number KERP 2002/22.

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Length: 41 pages
Date of creation: Nov 2002
Date of revision:
Publication status: Published in Economic Theory, Vol. 26, Number 4, November 2005, pages: 923-946. [ doi:10.1007/s00199-004-0566-5 ]
Handle: RePEc:kee:kerpuk:2002/22

Note: Much of the research in this paper was undertaken while the first author was a Visiting Scholar at the Center for Economic Studies, University of Munich. The support of the Center is gratefully acknowledged. The work of the first author was supported by a Leverhulme Research Fellowship. We would like to thank Wolfgang Buchholz, Juergen Eichberger, Gauthier Lanot, Todd Sandler, Henry Tulkens and members of seminars at the University of Melbourne and the Australian National University for helpful and encouraging comments on earlier drafts.
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Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
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Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom
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Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

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Related research
Keywords: Contests; rentseeking; noncooperative games; share functions; share correspondences.;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Rubin, Paul H & Curran, Christopher & Curran, John F, 2001. " Litigation versus Legislation: Forum Shopping by Rent Seekers," Public Choice, Springer, vol. 107(3-4), pages 295-310, June. [Downloadable!] (restricted)
  2. Steffen Huck & Kai A. Konrad & Wieland Müller, 2002. "Merger and Collusion in Contests," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 563-, December.
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    Other versions:
  4. Perez-Castrillo, J David & Verdier, Thierry, 1992. " A General Analysis of Rent-Seeking Games," Public Choice, Springer, vol. 73(3), pages 335-50, April.
  5. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-98, December. [Downloadable!] (restricted)
  6. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
    Other versions:
  7. Loury, Glenn C, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 395-410, August. [Downloadable!] (restricted)
    Other versions:
  8. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics. [Downloadable!]
  9. Hillman, Arye L & Katz, Eliakim, 1984. "Risk-Averse Rent Seekers and the Social Cost of Monopoly Power," Economic Journal, Royal Economic Society, vol. 94(373), pages 104-10, March. [Downloadable!] (restricted)
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  11. Corchon, Luis C, 2000. " On the Allocative Effects of Rent Seeking," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 483-91. [Downloadable!] (restricted)
  12. Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer, vol. 40(1), pages 139-149, July. [Downloadable!] (restricted)
  2. Matthias Dahm & Nicolás Porteiro, 2008. "Biased contests," Public Choice, Springer, vol. 136(1), pages 55-67, July. [Downloadable!] (restricted)
    Other versions:
    • Matthias Dahm & Nicolás Porteiro, 2006. "Biased Contests," Working Papers 06.21, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
  3. Richard Cornes & Roger Hartley, 2003. "Loss Aversion and the Tullock Paradox," Keele Economics Research Papers KERP 2003/06, Centre for Economic Research, Keele University. [Downloadable!]
  4. Jörg Franke, 2007. "Does Affirmative Action Reduce Effort Incentives? A Contest Game Analysis," UFAE and IAE Working Papers 711.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  5. Amegashie, A., 2008. "Socially-Tolerable Discrimination," Working Papers 2008-6, University of Guelph, Department of Economics. [Downloadable!]
  6. Alexander Matros & Daniel Armanios, 2009. "Tullock’s contest with reimbursements," Public Choice, Springer, vol. 141(1), pages 49-63, October. [Downloadable!] (restricted)
  7. Alex Robson & Stergios Skaperdas, 2008. "Costly enforcement of property rights and the Coase theorem," Economic Theory, Springer, vol. 36(1), pages 109-128, July. [Downloadable!] (restricted)
    Other versions:
  8. R Cornes & R Hartley, 2005. "The Geometry of Aggregative Games," The School of Economics Discussion Paper Series 0514, Economics, The University of Manchester. [Downloadable!]
  9. Amegashie, J.A., 2005. "Information Transmission in Elimination Tournaments," Working Papers 2005-11, University of Guelph, Department of Economics. [Downloadable!]
  10. A. Dickson & R. Hartley, 2005. "The strategic Marshallian cross and bilateral oligopoly," The School of Economics Discussion Paper Series 0523, Economics, The University of Manchester. [Downloadable!]
  11. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer, vol. 41(2), pages 345-357, November. [Downloadable!] (restricted)
  12. Kai Konrad & Wolfgang Leininger, 2007. "The generalized Stackelberg equilibrium of the all-pay auction with complete information," Review of Economic Design, Springer, vol. 11(2), pages 165-174, September. [Downloadable!] (restricted)
    Other versions:
  13. Amegashie, J. Atsu, 2008. "Socially-Tolerable Discrimination," MPRA Paper 8543, University Library of Munich, Germany. [Downloadable!]
  14. Acemoglu, Daron & Jensen, Martin Kaae, 2009. "Aggregate Comparative Statics," CEPR Discussion Papers 7254, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  15. Paul Schweinzer & Ella Segev, 2008. "The optimal prize structure of symmetric Tullock contests," Discussion Papers 250, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  16. Carmen Bevia & Luis C. Corchon, 2008. "Peace agreements without commitment," Economics Working Papers we081508, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  17. Luis Corchón, 2007. "The theory of contests: a survey," Review of Economic Design, Springer, vol. 11(2), pages 69-100, September. [Downloadable!] (restricted)
    Other versions:
  18. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Väth, 2009. "Effort Maximization in Asymmetric N-person Contest Games," Ruhr Economic Papers 0130, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
    Other versions:
  19. Dmitry Ryvkin, 2007. "Tullock contests of weakly heterogeneous players," Public Choice, Springer, vol. 132(1), pages 49-64, July. [Downloadable!] (restricted)
  20. Alex Dickson & Roger Hartley, 2004. "Partial Equilibrium Analysis in a Market Game:the Strategic Marshallian Cross," Keele Economics Research Papers KERP 2004/07, Centre for Economic Research, Keele University. [Downloadable!]
  21. Richard Cornes & Roger Hartley, 2008. "Risk aversion in symmetric and asymmetric contests," The School of Economics Discussion Paper Series 0806, Economics, The University of Manchester. [Downloadable!]
  22. Richard Cornes & Roger Hartley, 2009. "Fully Aggregative Games," ANUCBE School of Economics Working Papers 2009-505, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
  23. Lambert Schoonbeek & Barbara Winkel, 2006. "Activity and inactivity in a rent-seeking contest with private information," Public Choice, Springer, vol. 127(1), pages 123-132, April. [Downloadable!] (restricted)
  24. Birendra K. Rai & Rajiv Sarin, 2007. "Parametric Contest Success Functions," Jena Economic Research Papers in Economics 2007-010, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek. [Downloadable!]
  25. Alex Dickson & Roger Hartley, 2009. "Bilateral oligopoly and quantity competition," The School of Economics Discussion Paper Series 0911, Economics, The University of Manchester. [Downloadable!]
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