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Delegation in first-price all-pay auctions

Author

Listed:
  • Kai A. Konrad

    (Social Science Center Berlin (WZB), Germany, and Department of Economics, Free University of Berlin, Germany)

  • Wolfgang Peters

    (Department of Economics, European University Viadrina, Germany)

  • Karl Wärneryd

    (Department of Economics, Stockholm School of Economics, Sweden)

Abstract

In a first-price all-pay auction buyers have an incentive to delegate the bidding to agents and to provide these agents with incentives to make bids that differ from the bids the buyers would like to make. Both buyers are better off in this strictly non-cooperative delegation equilibrium and the delegation contracts are asymmetric, even if the buyers and the auction are perfectly symmetric. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Kai A. Konrad & Wolfgang Peters & Karl Wärneryd, 2004. "Delegation in first-price all-pay auctions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(5), pages 283-290.
    • Handle: RePEc:wly:mgtdec:v:25:y:2004:i:5:p:283-290
    DOI: 10.1002/mde.1182
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    References listed on IDEAS

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    1. Baik, Kyung Hwan & Kim, In-Gyu, 1997. "Delegation in contests," European Journal of Political Economy, Elsevier, vol. 13(2), pages 281-298, May.
    2. Michael R. Baye & Dan Kovenock & Casper G. Vries, 1996. "The all-pay auction with complete information," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 209-223, Springer.
    3. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September.
    4. Konrad, Kai A., 2000. "Spatial contests," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 965-974, August.
    5. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    6. Tore Ellingsen, 2008. "Strategic Buyers and the Social Cost of Monopoly," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 399-408, Springer.
    7. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
    8. Stanley M. Besen & Joseph Farrell, 1994. "Choosing How to Compete: Strategies and Tactics in Standardization," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 117-131, Spring.
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    Cited by:

    1. Huck, Steffen & Konrad, Kai A. & Muller, Wieland, 2001. "Divisionalization in contests," Economics Letters, Elsevier, vol. 70(1), pages 89-93, January.
    2. Martin Kolmar & Andreas Wagener, 2013. "Inefficiency As A Strategic Device In Group Contests Against Dominant Opponents," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 2083-2095, October.
    3. Stefan Brandauer & Florian Englmaier, 2009. "A model of strategic delegation in contests between groups," Review of Economic Design, Springer;Society for Economic Design, vol. 13(3), pages 205-232, September.
    4. Krakel, Matthias & Sliwka, Dirk, 2006. "Strategic delegation and mergers in oligopolistic contests," Journal of Economics and Business, Elsevier, vol. 58(2), pages 119-136.
    5. Kai A. Konrad & Florian Morath, 2018. "To Deter Or To Moderate? Alliance Formation In Contests With Incomplete Information," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1447-1463, July.
    6. Friedel Bolle & Philipp E. Otto, 2016. "Role-dependent Social Preferences," Economica, London School of Economics and Political Science, vol. 83(332), pages 704-740, October.
    7. Amegashie, J. Atsu & Kutsoati, Edward, 2007. "(Non)intervention in intra-state conflicts," European Journal of Political Economy, Elsevier, vol. 23(3), pages 754-767, September.
    8. Kyung Hwan Baik & Jong Hwa Lee, 2013. "Endogenous Timing In Contests With Delegation," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 2044-2055, October.
    9. Matthias Kräkel, 2004. "R&D spillovers and strategic delegation in oligopolistic contests," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 147-156.
    10. Rosar, Frank, 2013. "Optimal procurement and outsourcing of production in small industries," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79812, Verein für Socialpolitik / German Economic Association.
    11. Odd Rune Straume, 2006. "Managerial Delegation and Merger Incentives with Asymmetric Costs," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(3), pages 450-469, September.
    12. Rosar, Frank, 2017. "Strategic outsourcing and optimal procurement," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 91-130.
    13. Johannes Münster, 2007. "Contests with investment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 849-862.

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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