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The beauty of "bigness" in contest design: merging or splitting?

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  • Fu, Qiang
  • Lu, Jingfeng

Abstract

This paper studies in a multiple-winner contest setting how the total efforts may vary between a grand contest and a set of subcontests. We first show that the rent-dissipation rate increases when the numbers of contestants and prizes are "scaled up". In other words, the total efforts of a contest exhibit a striking "increasing return to scale" property: when the numbers of contestants and prizes scale up proportionally, the total efforts of the contest increase more than proportionally. Thus, the total efforts must increase when a set of identical subcontests are merged into a grand contest. Equivalently, the total efforts decrease when a grand contest is evenly divided. We further allow the grand contest to be split into uneven subcontests. We show that under a mild and plausible condition (regular contest technology), the grand contest generates more efforts as compared to any split contests.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 947.

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Date of creation: Apr 2006
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Handle: RePEc:pra:mprapa:947

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Related research

Keywords: Contests; Multiple-winners; Efforts; Size; Replication;

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References

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  1. Barut, Yasar & Kovenock, Dan, 1998. "The symmetric multiple prize all-pay auction with complete information," European Journal of Political Economy, Elsevier, vol. 14(4), pages 627-644, November.
  2. Amegashie, J Atsu, 2000. " Some Results on Rent-Seeking Contests with Shortlisting," Public Choice, Springer, vol. 105(3-4), pages 245-53, December.
  3. Clark, Derek J & Riis, Christian, 1998. "Competition over More Than One Prize," American Economic Review, American Economic Association, vol. 88(1), pages 276-89, March.
  4. Wärneryd, Karl, 1997. "Distributional Conflict and Jurisdictional Organization," Working Paper Series in Economics and Finance 173, Stockholm School of Economics.
  5. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
  6. Warneryd, Karl, 2001. "Replicating contests," Economics Letters, Elsevier, vol. 71(3), pages 323-327, June.
  7. Inderst, Roman & Müller, Holger M. & Wärneryd, Karl, 2000. "Influence Costs and Hierarchy," Sonderforschungsbereich 504 Publications 00-30, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  8. Clark, Derek J. & Riis, Christian, 1998. "Influence and the discretionary allocation of several prizes," European Journal of Political Economy, Elsevier, vol. 14(4), pages 605-625, November.
  9. Yates, Andrew J. & Heckelman, Jac C., 2001. "Rent-setting in multiple winner rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 17(4), pages 835-852, November.
  10. Clark, Derek J & Riis, Christian, 1996. " A Multi-winner Nested Rent-Seeking Contest," Public Choice, Springer, vol. 87(1-2), pages 177-84, April.
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