We generalize the War of Attrition model to allow for N + K firms competing for N prizes. Two special cases are of particular interest. First, if firms continue to pay their full costs after dropping out (as in a standard-setting context), each firm's exit time is independent both of K and of the actions of other players. Second, in the limit in which firms pay no costs after dropping out (as in a natural-oligopoly problem), the field is immediately reduced to N + 1 firms. Furthermore, we have perfect sorting, so it is always the K 1 lowest-value players who drop out in zero time, even though each player's value is private information to the player. We apply our model to politics, explaining the length of time it takes to collect a winning coalition to pass a bill.
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5872.
Length: Date of creation: Jan 1997 Date of revision: Handle: RePEc:nbr:nberwo:5872
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Find related papers by JEL classification: E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Determination of Interest Rates; Term Structure of Interest Rates D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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