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The Generalized War of Attrition

  • Paul Klemperer
  • Jeremy Bulow

We model a War of Attrition with N+K firms competing for N prizes. If firms must pay their full costs until the whole game ends, even after dropping out themselves (as in a standard-setting context), each firms exit time is independent both of K and of other players actions. If, instead, firms pay no costs after dropping out (as in a natural oligopoly), the field is immediately reduced to N+1 firms. Furthermore, in this limit it is always the K-1 lowest-value firms who drop out in zero time, even though each firms value is private information to itself.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 1998-W01.

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Date of creation: 01 Nov 1997
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Handle: RePEc:oxf:wpaper:1998-w01
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