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The Generalized War of Attrition

Author

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  • Paul Klemperer

    (Oxford University)

  • Jeremy Bulow

    (Stanford University)

Abstract

[Forthcoming, American Economic Review.] 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 firm's 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 firm's value is private information to itself.

Suggested Citation

  • Paul Klemperer & Jeremy Bulow, 1999. "The Generalized War of Attrition," Game Theory and Information 9901004, EconWPA.
  • Handle: RePEc:wpa:wuwpga:9901004
    Note: Type of Document - pdf; prepared on IBM PC ; to print on HPLaserjet4mplus/PostScript; pages: 24 ; figures: none. We never published this piece and now we would like to reduce our mailing and xerox cost by posting it.
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    References listed on IDEAS

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    More about this item

    Keywords

    War of Attrition Auctions Standards Natural Monopoly Oligopoly Twoness Strategic Independence;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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