the solution to the tullock rent seeking game when r 2 mixed strategy equilibria and mean dissipation rates in tullock s rent seeking model the probability a player wins the game depends on expenditures raised to the power r we show that a symmetric mixed strategy nash equilibrium exists when r 2 and that overdissipation of rents does not arise in any nash equilibrium we derive a tight lower bound on the level of rent dissipation that arises in a symmetric equilibrium when the strategy space is discrete and show that full rent dissipation occurs when the strategy space is continuous our results are shown to be consistent with recent experimental evidence on the dissipation of rents

caps on political lobbying the cost of political campaigns in the u s has risen substantially in recent years for example real spending on congressional election campaigns doubled between 1976 and 1992 steven d levitt 1995 there are many reasons why increased campaign spending might be socially harmful first increased spending means increased fund raising which may keep politicians from their legislative duties 1 second a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes on the shaping of legislation or on the outcome of regulatory proceedings 2 that is the socially preferred candidate or legislation may not prevail likewise a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator s intervention 3 third a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector a desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending beginning with the passage of the federal election campaign act feca political action committees pacs can contribute at most 5 000 per election to a candidate while individuals can contribute at most 1 000 restrictions have also been put on in kind contributions making it more difficult to circumvent these limits 4 while direct restrictions on campaign spending have proven difficult to implement recent initiatives aim to impose voluntary spending limits and stricter limits on contributions 5 despite the existing legislation and the proposals to limit contributions little is known about the impact of contribution limits on aggregate expenditures while it is intuitively appealing that aggregate expenditures would drop we challenge that intuition here we study a lobbying game and show that a cap on individual lobbyists expenditures may have the perverse effect of increasing aggregate expenditures and loweri this abstract was borrowed from another version of this item

a comment on sequential elections and overlapping terms voting for us senate in a recent paper in this journal heckelman explains why senators from the same state often vote differently and still get re elected he argues that in a two party system primary elections lead to divergence of party platforms moreover he shows that the introduction of primary elections and overlapping terms into the median voter model leads to the prediction that extremist candidates win the general election in this comment i argue that when in primaries voters view office as a means to policy primary elections strengthens rather than weakens the prediction of the median voter model that policy platforms converge

stochastic asymmetric blotto games an experimental study we consider a model where two players compete for n items having different common values in a blotto game players must decide how to allocate their common budgets across all n items the winner of each item is determined stochastically using a lottery mechanism which yields a unique equilibrium in pure strategies we analyze behavior under two competing payoff objectives found in the blotto games literature that have not been previously compared i players aim to maximize their total expected payoff and ii players maximize the probability of winning a majority value of all n items we report results from an experiment where subjects face both payoff objectives and we find support for the differing theoretical predictions

sequential elections and overlapping terms voting for us senate abstract this paper presents a model in which voters attempt to balance the ideological positions of their senate representatives candidate positions are determined endogenously through a primary system the median voter theorem is applied in each election to determine winning platforms based on voter preferences which may differ from their individual bliss points contrary to the original median voter theorem the main implications of this model are that i convergence on platform positions is not achieved in the general election and ii extremist candidates defeat moderates in the stable long run equilibrium

local economic gains from primary election spending this article asks how government and private consumption spending affect earnings in service sectors to do this we exploit the variation across states and time in the money spent while campaigning for a party s presidential primary nomination we create a novel data set combining the date each state held its primary from 1976 to 2008 the date in each election cycle in which only one candidate remained and quarterly state earnings by sector using an instrumental variable strategy we find that hosting a primary election increases earnings particularly in the retail and accommodation sectors these results remain consistent when using data on primary campaign expenditures across states in the 2004 and 2008 elections

strategic competition in sequential election contests this paper studies a sequential election contest such as theamerican presidential primary in which several electionsoccur one at a time until a single winner emerges theconventional wisdom is such a system benefits a candidatefavored in the initial elections because of momentum thispaper uncovers a potentially opposing force if participationis costly and candidates exit when they have unfavorablefuture prospects a candidate with friendly elections at theend of the contest will typically benefit from the resultinggame theoretic competition tension between this strategic effect and momentum helpsexplain several empirical regularities of presidentialprimaries

antitrust for high technology industries assessing research joint ventures and mergers the purpose of this paper is to analyze if and how the standard methodology of antitrust analysis should be modified to reflect the importance of r and d and innovation as competitive forces and engines of economic progress focus is on such r and d intensive business combinations as research joint ventures rjvs and horizontal mergers in high technology industries the authors do not propose a complete set of guidelines for the assessment of such combinations they present an economic model of rjvs and high technology mergers that might serve as an analytical underpinning for such guidelines one conclusion of the analysis is that rjvs ought to be accorded special treatment under the antitrust laws this special treatment should entail an explicit recognition that rjvs will be scrutinized under the rule of reason according to guidelines specific to this purpose

a patent system for both diffusion and exclusion public policy analysis of optimal patent regimes is often framed as a tradeoff between static and dynamic efficiency in this analytical framework weak patent protection and strict antitrust policy are taken to be directed toward static concerns while protection of intellectual property through strong patent laws is taken as a reflection of broader social concerns for long run growth and technological progress this characterization has some truth but the magnitude of the conflict between static and dynamic efficiency can easily be exaggerated in this article i want to argue that weak patent protection need not be inimical to economic growth and conversely that strong patent protection need not be an enemy of diffusion appropriately structured patent law and antitrust rules can together ensure incentives for r d and also induce cooperation among firms in diffusing r d results through licensing and other means at the same time cooperation among firms at the r d stage can counterbalance weak patent protection by internalizing spillovers from ongoing r d programs and such cooperation may also produce additional spillovers from the existing knowledge

contests with small noise and the robustness of the all pay auction this paper considers all pay contests in which the relationship between bids and allocations reflects a small amount of noise prior work had focused on one particular equilibrium however there may be other equilibria to address this issue we introduce a new and intuitive measure for the proximity to the all pay auction this allows in particular to provide simple conditions under which actually any equilibrium of the contest is both payoff equivalent and revenue equivalent to the unique equilibrium of the corresponding all pay auction the results are shown to have powerful implications for monopoly licensing political lobbying electoral competition optimally biased contests the empirical analysis of rent seeking and dynamic contests

how to split the pie optimal rewards in dynamic multi battle competitions abstract multi battle competitions are ubiquitous in real life in this paper we examine the effort maximizing reward design in sequentially played multi battle competitions between two players the organizer has a fixed prize budget and rewards players contingent on the number of battles they win in a three battle contest a full spectrum of contest technologies in the tullock family is accommodated we find that the optimal design varies with the discriminatory power of the contest technology in particular when it is in the low range winner take all is optimal for the intermediate range as discriminatory power increases the optimal prize structure evolves continuously from winner take all to the proportional division rule due to the need to mitigate the growing momentum discouragement effect for the high range a wide span of prize structures extracts full surplus and is thus optimal several robustness checks confirm that mitigating the momentum discouragement effect is essential for effort maximizing prize design in dynamic multi battle contests

election goals and the allocation of campaign resources this paper compares the equilibrium behavior and outcomes in a model of two party competition for legislative seats under two different assumptions about the parties goals 1 parties maximize the expected number of seats won and 2 parties maximize the probability of winning a majority of the seats the two goals may lead to qualitatively different behavior and studying the differences yields insights into the relationship between the goals and the role of assymetries between the parties

creating balance in dynamic competitions abstract we consider incentives for organizing competitions in multiple rounds focusing on situations where there is heterogeneity among the contestants ex ante which discourages effort in a single contest heterogeneity evolves across rounds depending upon the outcomes of previous rounds we present conditions under which balance in such a competition can be created by determining the number of rounds and dividing the prize fund carefully across them so that full rent dissipation entails in the model each round is an all pay auction where contestants differ in their abilities to gain a momentum from winning we also discuss the case when negative prizes are feasible demonstrating that this strengthens the full dissipation result and we consider a case where the size of the winner s momentum is related to the size of the prize attained showing that the stronger this linkage the less of the prize is awarded early on

do subsidies to cooperative r d actually stimulate r d investment and cooperation abstract a popular view in the industrial policy debate is that cooperation among firms r d departments should be encouraged the european community japan and the us all subsidize research cooperatives this study presents the first empirical test of the effectiveness of such subsidies using a database of competitors in 45 technological races the results indicate that subsidies that require cooperation in the form of result sharing agreements significantly increase the likelihood of cooperation but they decrease incentives to conduct r d subsidy programmes such as eureka that require cooperation but do not require result sharing agreements do not increase the likelihood of cooperation they do however increase incentives to conduct r d somewhat about to the same extent as subsidies that do not require cooperation

primaries and the new hampshire effect candidates for u s presidential elections are determined through sequential elections in single states the primaries we develop a model in which candidates can influence their winning probability in electoral districts by spending money on campaigning the equilibrium replicates several stylized facts very well campaigning is very intensive in the first district the outcome of the first election then creates an asymmetry in the candidates incentives to campaign in the next district which endogenously increases the equilibrium probability that the first winner wins in further districts on the normative side our model oers a possible explanation for the sequential organization it leads in expectation to a lower level of advertising expenditures than simultaneous elections moreover if one of the candidates is the more eective campaigner sequential elections also perform better with regard to the selection of the best candidate

momentum and social learning in presidential primaries this paper investigates social learning in sequential voting systems in the econometric model candidates experience momentum effects when their performance in early states exceeds expectations the empirical application uses daily polling data from the 2004 presidential primary we find that kerry benefited from surprising wins in early states and took votes away from dean owing to these momentum effects early voters had up to five times the influence of late voters in the selection of candidates and this helps to explain the distribution of advertising expenditures finally we use the estimated model to conduct two counterfactual experiments

sharing productive knowledge in internally financed r d contests we examine the optimal design of two stage research and development r d joint ventures at the second stage researchers choose r d effort levels independently in an attempt to achieve an innovation in the first stage researchers have an opportunity to share endowments of productive knowledge initial pecuniary resources are limited so rewards for disclosing knowledge and succeeding at the second stage must be financed from successful innovation we derive conditions under which full sharing of knowledge and the socially desired levels of r d effort can be motivated and examine the optimal incentive structure when this ideal outcome cannot be implemented full sharing will always be motivated at the first stage but inefficient r d effort will be induced to foster information sharing

the role of information sharing in cooperative research and development abstract this paper develops a model in which r d cooperation enables firms to increase the probability of discovering a new product by sharing information about research strategies and outcomes numerical computations of equilibrium show that cooperation tends to increase in the underlying probability of research success total surplus generally increases as more firms cooperate and cooperation in equilibrium never exceeds that which maximizes total surplus however when the probability of an innovation s success is relatively low no cooperation occurs nor will much be socially desired finally self imposed limits on membership in the cooperative entity tend to reduce total surplus

a model of rivalries with endogenous prize and strength abstract this paper extends bevia and corchon 2013 to a model with both endogenous contestable prize and endogenous relative strength such a setting is ideal for the study of intra organizational rivalries commonly observed in family sports promotion and duopoly we find that when the game starts with asymmetric players the weaker player exerts more effort than the stronger player as a result the weaker player partially overcomes the disadvantage of being weak in this setting neither domino nor avalanche effect exists

uniqueness of equilibrium in two player asymmetric tullock contests with intermediate discriminatory power abstract this paper provides a different approach to establish the uniqueness of equilibrium in tullock contests between two players with asymmetric valuations when the discriminatory power r is between 1 and 2 our result complements that of ewerhart 2017 in filling up the remaining gap in the literature on the uniqueness of equilibrium in two player asymmetric tullock contests

equilibria in campaign spending games theory and data we present a formal game theoretic model to explain the simultaneity problem that makes it difficult to obtain unbiased estimates of the effects of both incumbent and challenger spending in u s house elections the model predicts a particular form of correlation between the expected closeness of the race and the level of spending by both candidates which implies that the simultaneity problem should not be present in close races and should be progressively more severe in the range of safe races that are empirically observed this is confirmed by comparing simple ols regression of races that are expected to be close with races that are not using house incumbent races spanning two decades

a structural model on the impact of prediscovery licensing and research joint ventures on innovation and product market efficiency abstract using a novel database on prediscovery licensing agreements one type of r d cooperation as well as detailed firm level and semiconductor market specific information we estimate the impact of prediscovery licensing agreements pdlas on innovation and product market efficiency our results show that pdlas reduce innovative activity in the semiconductor industry by 10 percent or 4089 patents throughout the 1989 1999 period on the contrary research joint ventures a different type of r d cooperation increase innovative activity based on a structural model we provide evidence that pdlas increase production costs and semiconductor prices by 1 percent which results in customers paying an additional 1 1 billion for semiconductors per year beyond the common concern that r d cooperations facilitate coordination activities in product markets via price fixing our study highlights that pdlas can be used as an instrument to coordinate r d activities which can reduce innovation activity and increase costs and prices

cognitive performance in competitive environments evidence from a natural experiment competitive situations that involve cognitive performance are widespread in labor markets schools and organizations including test taking competition for promotion in firms and others this paper studies cognitive performance in a high stakes competitive environment the analysis takes advantage of a natural experiment that randomly allocates different emotional states across professional subjects competing in a cognitive task the setting is a chess match where two players play an even number of chess games against each other alternating the color of the pieces white pieces confer an advantage for winning a chess game and who starts the match with these pieces is randomly decided the theoretical analysis shows that in this setting there is no rational reason why winning frequencies should be better than 50 50 in favor of the player drawing the white pieces in the first game yet we find that observed frequencies are about 60 40 differences in performance are also stronger when the competing subjects are more similar in cognitive skills we conclude that the evidence is consistent with the hypothesis that psychological elements affect cognitive performance in the face of experience competition and high stakes

the stability of joint ventures reciprocity and competitive rivalry the focus of the following empirical analysis is the influence of reciprocity and long term relationships on the stability of joint ventures these cooperative incentives are offset by industry structural conditions which may promote competitive rivalry among the partners to separate these effects on joint venture survival the hypothesized relationships are proxied by variables drawn from industry and questionnaire data and estimated under a hazard model specification a theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis copyright 1989 by blackwell publishing ltd

contests with multi tasking the standard contest model in which participants compete in a single dimension is well understood and documented multi dimension extensions are possible but are liable to increase the complexity of the contest structure mitigating one of its main advantages simplicity in this paper we propose an extension in which competition ensues in several dimensions and a competitor that wins a certain number of these is awarded a prize the amount of information needed to run the contest is hence limited to the number of dimensions won by each player we look at the design of this contest from the point of view of maximising effort in the contest per dimension and totally and show that there will be a tendency to run small contests with few dimensions the standard tullock model and its results are encompassed by our framework

sequential or simultaneous elections a welfare analysis this paper contributes to a debate over a key question in the design of electoral systems should all voters go to the polling booth on the same day or should elections be staggered with late voters observing the choices of early voters before making their decisions using a model of voting and social learning we identify a key trade obetween simultaneous and sequential elections in particular sequential election systems place too much weight on the preferences and information of early states but also provide late voters with information that is valuable in terms of selecting high quality candidates under simultaneous elections voters equally weigh the available information but place too little weight on the information in aggregate and thus place too much weight on their priors given this trade o either sequential or simultaneous elections might be welfare preferred we provide a quantitative evaluation of this trade obased upon an application to the 2004 presidential primary the results suggest that simultaneous systems outperform sequential systems although the dierence in welfare is relatively small

team contests with multiple pairwise battles abstract we consider a multi battle team contest in which players from two rival teams form pairwise matches to fight in distinct component battles which are carried out sequentially or partially

endogenous strength in conflicts in this paper we study a two period contest where the strength of players in the second period depends on the result of the contest in the first stage we show that in contrast to one shot contests in the same setting heterogeneous players exert different efforts in the first stage and rent dissipation in the first period may be large we study the conditions under which the discouragement effect holds in addition new issues emerge like the evolution of the strengths and the shares of the prize during the game

candidate competition and voter learning in the 2000 2012 us presidential primaries when candidates in primary elections are ideologically differentiated e g conservatives and moderates in the republican party then candidates with similar positions affect each others vote shares more strongly than candidates with different ideological positions we measure this effect in us presidential primaries and show that it is of first order importance we also show that voters beliefs about the candidates harden over the course of the primary as manifested in the variability of candidate vote shares we discuss models of sequential voting that cannot yield that pattern of results and propose an explanation based on a model with horizontally and vertically differentiated candidates and incompletely informed voters consistent with the predictions of this model we also show that in more conservative states low quality conservative candidates do better relative to high quality conservatives and vice versa

an analysis of cooperative research and development i analyze the effects of cooperative research whereby member firms agree to share the costs andfruits of a research project before they undertake it in this model industrywide agreements tend to have socially beneficial effects when the degree ofproduct market competition is low when there are r d spillovers in the absence of cooperation when a high degree of sharing is technologically feasible and when the agreement concerns basic research rather than development activities i show that a royalty free cross licensing agreement among any number offirms lowers the equilibrium level of innovation even though it increases the efficiency of r d through sharing

research joint ventures and optimal r d policy with asymmetric information abstract when to allow research joint ventures rjvs or not is an important instrument in the development of an optimal r d policy the regulator however is unlikely to know all the relevant information to regulate r d optimally the extent to which there exist appropriability problems between the firms is one such variable that is private information to the firms in the industry in a duopoly setting we analyze the characteristics of a second best r d policy where the government can either allow rjvs or not and give lump sum subsidies to the parties involved the second best r d policy without subsidies will either block some welfare improving rjvs or allow some welfare reducing ones with lump sum subsidies the second best policy trades off the expected subsidy cost with allowing welfare decreasing rjvs or blocking welfare increasing ones

on equilibrium player ordering in dynamic team contests we study equilibrium player ordering in a dynamic all pay contest between two teams the contest lasts two periods and each team consists of two players who perform in different periods on behalf of their teams the team with the higher aggregate output wins the prize which is a public good to its players each team has one stronger player and one weaker player and the two teams can differ in their values of the prize the teams maximize their winning odds by strategically assigning their players to different periods we find that when the intrateam heterogeneity in player ability is not excessive the teams would allocate their stronger players to the late positions as the anchormen when both the intrateam ability gap and interteam heterogeneity in teams values become excessively large the team with high value always places its stronger player in the early position who will place a large bid to preempt late competition jel c7 d7 d8

inter firm cooperation with imperfectly appropriable research abstract inter firm collaboration in pre competitive research is not always beneficial rather its effectiveness in raising social benefits relative to a non cooperative setup depends on both the nature of the agreement and the technological and market conditions of the industry in question joint ventures that simply allow members to coordinate their actions in pre competitive research can restore firm incentives for both pre competitive research and development in the presence of high knowledge spillovers and poor opportunities for innovation joint ventures which additionally improve the dissemination of information among member firms raise social benefits whenever the opportunities for innovation are not exceptionally good even in the presence of relatively insignificant spillovers

the relationship between r d collaboration subsidies and r d performance empirical evidence from finland and germany this study focuses on the impact of innovation policies and r d collaboration in germany and finland we consider collaboration and subsidies as heterogeneous treatments and perform an econometric matching to analyze r d and patent activity at the firm level in general we find that collaboration has positive effects in germany subsidies for individual research do neither exhibit a significant impact on r d nor on patenting but the innovative performance could be improved by additional incentives for collaboration for finnish companies public funding is an important source of finance for r d without subsidies recipients would show less r d and patenting activity whilst those firms not receiving subsidies would perform significantly better if they were publicly funded copyright 2007 john wiley sons ltd

campaign contributions as investments the u s house of representatives 1980 1986 this paper treats the market for special interest campaign contributions and political favors as a simple asset market the model yields a simple equilibrium relationship among three variables the total amount of investor contributions a candidate receives the monetary value of the favors he has promised and his probability of winning using data on open seat races for the u s house of representatives i confront the model with a series of tests despite the starkness of the model the results of these tests are highly supportive

incentives for cooperative and non cooperative r and d in duopoly abstract this paper tries to explain why duopolistic firms would like to enter cooperative r and d venture even when they would act non cooperatively in the product market we show that both very high and very low probabilities of success in r and d can induce firms to go for r and d joint ventures this research highlights the modus operandi for cooperative research even without and spillover of individual r and d and or with a reasonably low sunk cost of r and d

the economic design of sporting contests what is the optimal number of entrants in a race or the optimal number of teams in a baseball league what is the optimal structure of prizes for a golf tournament or degree of revenue sharing for a football championship how evenly balanced should the competing teams be in the nascar or formula one championships what is the maximum number of entrants per nation to the olympic games that should be permitted what quota of qualifying teams to the soccer world cup should be allocated to the developing nations

difference form contests and the robustness of all pay auctions abstract in much of the existing literature on rent seeking games the outcome of the contest is either infinitely sensitive or relatively insensitive to contestants efforts the current paper presents a family of contest games that permit characterization of equilibrium for all levels of sensitivity of the outcome to contestants efforts specifically the outcome of the contest depends on the difference between efforts which encompass the lottery and the all pay auction as polar cases the equilibrium converges to that of the all pay auction as the probability of winning the prize grows infinitely sensitive to one s effort and the main qualitative features of equilibrium persist over a large parameter region journal of economic literature classification numbers d44 d72

innovation and cooperation implications for competition and antitrust n k robel laureate robert solow and his colleagues on mit s industrial productivity commission recently noted dertouzos lester and solow 1989 p 7 undeveloped cooperative relationships between individuals and between organizations stand out in our industry studies as obstacles to technological innovation and the improvement of industrial performance and later p 105 that interfirm cooperation in the u s has often though not always been inhibited by government antitrust regulation these striking conclusions warrant further exploration unfortunately industrial organization textbooks still discuss horizontal cooperation and competition almost exclusively in terms of standard cartel theory on the other hand vertical cooperation contracting is viewed differently and some textbooks provide treatments of supplier buyer relationships in which cooperation is viewed as enhancing efficiency both in the textbooks and in policy discussion among economists cooperation among competitors is highly suspect being perhaps the last bastion of what was once referred to as the inhospitality tradition in antitrust as a result very little literature addresses how cooperation among competitors can promote competition notwithstanding that cooperation among competitors may sometimes be essential if innovating firms are to compete in today s increasingly global markets imai and baba 1989 such cooperation is already important in japan and in europe 1

multi battle contests abstract we study equilibrium in a multistage race in which players compete in a sequence of simultaneous move component contests players may win a prize for winning each component contest as well as a prize for winning the overall race each component contest is an all pay auction with complete information we characterize the unique subgame perfect equilibrium analytically and demonstrate that it exhibits endogenous uncertainty even a large lead by one player does not fully discourage the other player and each feasible state is reached with positive probability in equilibrium pervasiveness expected effort in the component contests may be non monotonic in the closeness of the race and realized individual effort may exceed the value of the prize by a factor that is proportional to the maximum number of stage victories required

best of three contest experiments strategic versus psychological momentum abstract we conduct an experimental analysis of a best of three tullock contest intermediate prizes lead to higher efforts while increasing the role of luck as opposed to effort leads to lower efforts both intermediate prizes and luck reduce the probability of the contest ending in two rounds the patterns of players efforts and the probability that a contest ends in two rounds are consistent with strategic momentum i e a momentum generated due to strategic incentives inherent in the contest we do not find evidence for psychological momentum i e a momentum which emerges when winning affects players confidence similar to the previous studies of contests we find significantly higher efforts than predicted and strong heterogeneity in effort between the subjects

learning and coordination in the presidential primary system in elections with three or more candidates coordination among like minded voters is an important problem we analyze the trade off between coordination and learning about candidate quality under different temporal election systems in the context of the u s presidential primary system in our model candidates with different policy positions and qualities compete for the nomination and voters are uncertain about the candidates valence this setup generates two effects vote splitting i e several candidates in the same policy position compete for the same voter pool and voter learning as the results in earlier elections help voters to update their beliefs on candidate quality sequential voting minimizes vote splitting in late districts but voters may coordinate on a low quality candidate using the parameter estimates obtained from all the democratic and republican presidential primaries during 2000 2012 we conduct policy experiments such as replacing the current system with a simultaneous system adopting the reform proposal of the national association of secretaries of state or imposing party rules that lead to candidate withdrawal when pre specified conditions are met

sequential or simultaneous elections a welfare analysis sequential or simultaneous this paper addresses a key question on the design of electoral systems should all voters vote on the same day or should elections be staggered with late voters observing early returns before making their decisions using a model of voting and social learning we illustrate that sequential elections place too much weight on the preferences and information of early states but also provide late voters with valuable information under simultaneous elections voters equally weigh the available information but place too much weight on their priors providing an inappropriate advantage to front runners given these trade offs simultaneous elections are welfare preferred if the front runner initially has a small advantage but sequential elections are welfare preferred if the front runner initially has a large advantage we then quantitatively evaluate this trade off using data based on the 2004 presidential primary the results suggest that simultaneous systems outperform sequential systems although the difference in welfare is relatively small

experimental comparison of multi stage and one stage contests this article experimentally studies a two stage elimination contest and compares its performance with a one stage contest contrary to the theory the two stage contest generates higher revenue than the equivalent one stage contest there is significant over dissipation in both stages of the two stage contest and experience diminishes over dissipation in the first stage but not in the second stage our experiment provides evidence that winning is a component in a subject s utility a simple behavioral model that accounts for a non monetary utility of winning can explain significant over dissipation in both contests it can also explain why the two stage contest generates higher revenue than the equivalent one stage contest

entrepreneurship access policy and economic development lessons from industrial organization abstract this paper explores some relationships between promotion of competition and economic development that arise from the impacts of entrepreneurial firms in this respect two sets of policies are critical for furthering economic development first to arrest the diversion of entrepreneurial talent towards non productive activities an increased emphasis on preserving rewards from productive innovation is needed through the protection of commercial freedom property rights and contracts second given that essential local inputs are vulnerable to monopolization and foreclosure fostering opportunities for grass roots entrepreneurship becomes paramount through a more activist supply side competition policy emphasizing access to essential business services and other required local inputs a key message is that the conventional sensitivity of policy concerns about the social welfare effects of foreclosure should be extended to a domain beyond the usual essential facilities of public utilities it should include access to many other elements of the business infrastructure that are taken for granted in mature market economies but that pose real barriers to productive entrepreneurship at the grass roots level in the context of development additions to the incipient empirical work in this area could yield substantial policy dividends

the dynamics of majoritarian blotto games abstract we study colonel blotto games with sequential battles and a majoritarian objective for a large class of contest success functions the equilibrium is unique and characterized by an even split each battle that is reached before one of the players wins a majority of battles is allocated the same amount of resources from the player s overall budget as a consequence a player s chance of winning any particular battle is independent of the battlefield and of the number of victories and losses the player has accumulated in prior battles this result is in stark contrast to equilibrium behavior in sequential contests that do not involve either fixed budgets or a majoritarian objective we also consider the equilibrium choice of an overall budget for many contest success functions if the sequence of battles is long enough the payoff structure in this extended game resembles an all pay auction without noise

early round upsets and championship blowouts i introduction popular discussions of tournament play often celebrate the success of underdogs in early rounds and decry the prevalence of unexciting finals such a pattern might be just a statistical illusion there are many early round matches so some upsets are inevitable and there is only one final so it is unlikely to be the most exciting match of the tournament in this article we consider instead whether the pattern might have a real foundation in the strategic allocation of effort by tournament participants we analyze a two round tournament in which a favorite and underdog play in each of the two semifinals and then one player from each match advances to the final victory in a match is probabilistic in that the chance of winning is increasing in each player s relative quality and in his relative effort expenditure 1 each player has a fixed amount of effort to exert over the two rounds unused effort is of no value and the only payoff is from winning the tournament to maximize the chance of winning each player must balance out the benefits of expending more effort in the semifinal against the opportunity cost of having less effort available for the final favorites and underdogs both have an incentive to conserve resources for the final but the trade offs they face are different a favorite plays a weak opponent in the semifinal but is likely to face a tough opponent in the final so it has a strong incentive to hold back conversely an underdog already plays a tough opponent in the semifinal so it has less incentive to conserve effort for the final 2 because of these different incentives we find that in any symmetric nash equilibrium underdogs exert more effort than favorites do in the semifinal the extra effort does not fully compensate for lower ability and underdogs are still likely to lose but the chance of an upset rises in the final round each player expends all its remaining resources so differences in abilities are no longer compressed by strategic considerations instead an underdog who makes it to the final has fewer resources left to spend than the favorite so differences in abilities are amplified and the chance of a blowout by the favorite rises if a favorite loses to an underdog in the early rounds it is often accused of looking past the underdog to its next match even if a player s strategy is optimal ex ante it might turn out to be unsuccessful ex post so such criticism is often unfair our results imply that it is rational for the favorite to hold back on resources in the semifinal even if it correctly anticipates that in equilibrium the underdog will be playing harder sometimes the strategy will backfire but on average the favorite benefits from being in a better position for the final these results are derived using a standard contest model in which each player s probability of victory in a match is a strictly increasing function of his ability and effort 3 such models were first developed to analyze rent seeking tullock 1967 1980 and similar models appear in a wide variety of areas including patent races loury 1979 election campaigns snyder 1989 compensation schemes nalebuff and stiglitz 1983 career ladders lazear and rosen 1981 lobbying baye et al 1993 and sports contests szymanski 2003 4 more specifically we model the contest as a sequential elimination ladder tournament in which players first compete in separate groups and the winners then compete against each other rosen 1986 our result that underdogs do indeed try harder than favorites in the semifinals contrasts with that of rosen 1986 p 707 8 because the favorite has a better chance of victory in the final rosen finds that winning a semifinal match is more valuable to the favorite so the favorite tries harder than the underdog we reach the opposite conclusion because we assume that there is a fixed supply of effort to be used across rounds and unused effort in the tournament has no value

round robin tournaments with a dominant player we analyze the subgame perfect equilibrium of the round robin tournament with one strong dominant and two weak players and we compare this tournament and the one stage contest with respect to the players expected payoffs expected total effort and their probabilities of winning we find that if the contest designer s goal is to maximize the players expected total effort then if the asymmetry between the players is relatively low the one stage contest should be used however if the asymmetry is relatively high then the round robin tournament should be used

a tug of war team contest this paper analyzes a tug of war contest between two teams in each round of the tug of war a pair of agents from the opposing teams competes in a private value all pay auction with asymmetric value distributions and effort effectiveness whichever team arrives first at a given lead in terms of battle victories over the opponent wins the tug of war there exists a unique markov perfect equilibrium in bidding strategies which depend on the respective player s valuation and the current state of the tug of war we derive rich comparative statics for this equilibrium by using the fact that the state of the tug of war evolves according to a time homogeneous absorbing markov chain

cournot equilibrium with imperfectly appropriable r d the authors investigate the effects of knowledge spillovers numbers of incumbents and demand characteristics on market equilibria involving either noncooperative firms or a research joint venture firms engage in cost reducing r d before competing in outputs noncooperative r d expenditure is socially suboptimal with convex demand and likely to be so under general demand functions a research joint venture involving all firms in the industry always invests too little relative to the social optimum it may however lead to better market performance than is achieved under the noncooperative regime copyright 1994 by blackwell publishing ltd

the existence of equilibrium in discontinuous economic games i theory the article presents information about the existence of equilibrium in discontinuous economic games in this paper and its sequel presents study the existence of nash equilibrium in games where agents payoff functions are discontinuous the enquiry is motivated by a number of recent studies that have uncovered serious existence problems in seemingly innocuous economic games in the sequel to this paper authors have explained the utility function in the economic games referred to earlier are neither continuous nor quasi concave however they demonstrate that the payoff functions in mildly modified versions of these constructs exhibit two weaker forms of continuity which together with the requirement of quasi concavity suffice for the existence of an equilibrium from this one may conclude that at least in the modified versions of these models discontinuities in the payoff functions are not the real source of the problem rather it is the failure of the payoff functions to the quasi concave which is responsible for the non existence of equilibrium these observations bear on the existence of nash equilibrium in pure strategies

dynamic behavior and player types in majoritarian multi battle contests abstract in a dynamic contest where it is costly to compete a player who is behind must decide whether to surrender or keep fighting in the face of bleak odds we experimentally examine the game theoretic prediction of last stand behavior in a multi battle contest with a winning prize and losing penalty as well as the contrasting prediction of surrendering in the corresponding contest with no penalty we find varied evidence in support of these hypotheses in the aggregate data but more conclusive evidence when scrutinizing individual player behavior players realized strategies tend to conform to one of several types we develop a taxonomy to classify player types and study how types interact and how their incidence varies across treatments although last stand and surrendering behaviors arise at rates responsive to the importance of losing penalties the most prominent behavior is escalation

revenue ranking of optimally biased contests the case of two players it is shown that the equilibrium in the asymmetric two player tullock contest is unique for parameter values r 2 this allows proving a revenue ranking result saying that a revenue maximizing designer capable of biasing the contest always prefers a technology with higher r

do polls create momentum in political competition abstract we explore how public opinion polls affect candidates campaign spending in political competition generally polls lead to more asymmetric behavior under a majority rule there always exists an equilibrium in which the initially more popular candidate invests more in the campaign and thereby increases her lead in expectation polls create momentum when campaigning is very effective and the race is very close a second type of equilibrium may exist the trailing candidate outspends and overtakes his opponent regardless of the type of equilibrium polls have a tendency to decrease expected total campaigning expenditures by amplifying ex ante asymmetries between candidates and thus defusing competition when candidates care also for their vote share in addition to having the majority candidates incentives crucially depend on the distribution of voters candidate preferences

multi battle contests an experimental study this study examines behavior of subjects in simultaneous and sequential multi battle contests in simultaneous contests subjects make positive bids in each battle 80 of the time and bids fall within the predicted boundaries however 35 of the time subjects make positive bids in only two instead of all three battles and they significantly overuse moderately high bids in sequential contests theory predicts sizable bids in the first battle and no bids in the subsequent battles contrary to this prediction subjects significantly underbid in the first battle and overbid in subsequent battles consequently instead of always ending in the second battle contest proceeds to the third battle 38 of the time finally in both simultaneous and sequential settings subjects make higher aggregate bids than predicted resulting in negative expected payoffs

strategic competition among the few some recent developments in the economics of industry the title of this article is intended as a signal of two things first we are concerned with industries where several but not many firms are actually or potentially in competition with each other thus our topic is competition among the few 1 or oligopoly rather than the polar extremes of textbook perfect competition and pure monopoly secondly we are interested in the strategic nature of competition between firms where the meaning of strategic can be explained as follows if the essence of a game of strategy is the dependence of each person s proper choice of action on what he expects the other to do it may be useful to define a strategic move as follows a strategic move is one that influences the other person s choice in a manner favourable to one s self by affecting the other person s expectations of how one s self will behave schelling 1960 p 150

war and conflict in economics theories applications and recent trends we review the main economic models of war and conflict these models vary in details but their implications are qualitatively consistent highlighting key commonalities across a variety of conflict settings recent empirical literature employing both laboratory and field data in many cases confirms the basic implications of conflict theory however this literature also presents important challenges to the way economists traditionally model conflict we finish our review by suggesting ways to address these challenges

antitrust policy towards co operative r d ventures this paper surveys the theoretical literature on r d cartels and the empirical literature on problems of appropriability in order to evaluate the case for encouraging antitrust authorities to treat r d cooperative ventures leniently the case for r d cooperative ventures trades potential gains from internalizing technological spillovers off against a possible reduction in output market competition but the empirical evidence suggests that r d spillovers can easily be exaggerated this suggests that the design of antitrust policy towards r d cooperative ventures is likely to be of major importance if they are to yield net social gains and the paper concludes with a critical examination of the ncra introduced in u s and block exemption introduced in europe in the 1980s copyright 1993 by oxford university press

bandwagons and momentum in sequential voting in this paper i show that an equilibrium exists to the sequential voting game in which a bandwagon begins with probability 1 these bandwagons are driven by a combination of beliefs and the desire of voters to vote for the winning candidate significantly in this equilibrium the pivot probability for each voter is non zero even in an infinite population consequently the bandwagons do not always start after one or at most two favourable decisions as do economic cascades and varying levels of informative voting are observed consistent with observations from sequential voting in u s presidential primaries further voters are exposed to counterintuitive incentives referred to as buyers remorse that have been attributed to real primary voters i also derive equilibrium behaviour in this environment when voting is simultaneous and compare the quality of information aggregation within each mechanism i relate the conclusions to u s presidential primaries and find they are consistent with a common conclusion about the front loading of the primary process that in tight elections with no front runner simultaneous voting is preferred whereas in lopsided elections sequential voting is preferred the superior performance of sequential voting in lopsided races is precisely because bandwagons occur copyright 2007 wiley blackwell

a decision theoretic model of innovation technology transfer and trade we analyse a dynamic north south model of innovation technology transfer and trade northern firms conduct r d using labour which has alternative uses producing in the r d sector or a nontraded good sector since technology transfer prevents the north from fully appropriating benefits of r d the optimal rate of innovation for either profit maximizing firms or a utility maximizing northern planner is less than globally optimal an increased transfer rate intensifies competition of lower wage southern workers with northern workers in production so profit maximizing northern firms irrespective of their number or cooperation in r d reallocate labour toward r d

cooperation in r d the case of patent infringement agreements abstract this paper provides an insurance based argument behind patent infringement agreements pia such agreements constitute a form of cooperation in an otherwise non cooperative environment we develop a model where firms initially hold certain patents and undertake further r d by pursuing the latter they face a positive probability of infringing the patents held by the other a prior infringement agreement generates a binding contract so that such infringements would go unpunished if the infringing probability is not too low firms would have incentive to sign an agreement and sacrifice the monopoly option but this depends on the information structure about the patent infringement and search costs such a prior agreement is then compared and contrasted with a suitably designed ex post contract

complementary resources and cooperative research a model of research joint ventures among competitors we present a model of research joint ventures in which if firms have highly complementary skills and resources then they prefer to cooperate in areas where the technology is highly appropriable as in applied research the model also indicates that large firms have a greater incentive to cooperate because they are better positioned to capture the benefits of a research venture these findings seem to explain why cooperative research among rival firms in japan has been applied rather than basic and conducted frequently among large companies but firms prefer as small a partner as possible to limit the sharing of research results creating a tension that may make cooperative efforts among rivals difficult to manage for this reason cooperation with organizations such as universities or nonprofit institutions may be a viable alternative for firms looking for complementary skills and resources

from custer to thermopylae last stand behavior in multi stage contests abstract in a multi stage contest known as a two player race players display two fundamental behaviors 1 the laggard will make a last stand in order to avoid the cost of losing and 2 the player who is ahead will defend his lead if it is threatened last stand behavior in particular contrasts with previous research where the underdog simply gives up the distinctive results are achieved by introducing losing penalties and discounting into the racing environment this framework permits the momentum effect typically ascribed to the winner of early stages to be more thoroughly examined i study the likelihood that the underdog will catch up i find that neck and neck races are common when the losing penalty is large relative to the winning prize while landslide victories occur when the prize is relatively large closed form solutions are given for the case where players have a common winning prize and losing penalty

the diffusion of new technology and the market for an innovation this article shows that the diffusion of a capital embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions strategic behavior is inessential to this finding we develop a method for comparing diffusion rates for different market structures in the capital equipment market we consider cases with market power on the seller s side of the market and on the buyers side of the market a case with no market power and the welfare optimal case we find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal a monopoly supplier on the other hand adopts at a rate faster than is socially optimal this result is usually also the case when there is no market power finally we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power but retards later adoptions market power thus makes a difference in diffusion rates and on which side of the market that power lies makes a considerable difference

midweek effect on soccer performance evidence from the german bundesliga the home advantage phenomenon is a well established feature in sports competitions in this study we examine data from 2 013 soccer matches played in the german bundesliga during the seasons from 2007 2008 to 2016 2017 using a very rich data set our econometric analysis that is based on matching methods reveals that the usual home advantage disappears when the game is in the middle of the week instead of being on the weekend our results indicate that as the midweek matches are unevenly allocated among teams the actual schedules of the bundesliga favor teams with fewer home games in midweek the study also shows that these soccer specific findings may have some implications for the design of contests in general jel d00 l00 d20 z20

competition policy and innovation l article analyse les complementarites et les tensions entre la concurrence et l innovation tant du point de vue des instruments d analyse que du point de vue des politiques economiques

three object two bidder simultaneous auctions chopsticks and tetrahedra symmetric equilibria are constructed for a class of symmetric auction games the games all have two identical bidders bidding in three simultaneous first price sealed bid auctions for identical objects information is complete and the bidders marginal valuations increase for the second object and then decrease for the third in all cases the support of the mixture that generates the equilibrium is two dimensional and it surrounds a three dimensional set of best responses this appears to be a previously unknown structure

beyond chopsticks symmetric equilibria in majority auction games majority auction games are simultaneous sealed bid auctions of identical objects among identical bidders who each want to win a specified fraction more than a half of the objects each bidder receives no benefit from winning less than the specified fraction and no additional benefit from winning more than it symmetric equilibria having simple intuitive forms are shown to exist in first price second price and all pay versions of such games when the number of bidders is sufficiently large this contrasts with earlier results for the two bidder pure chopstick majority auction games where the only known equilibria are more complicated

sequential voting in large elections with multiple candidates abstract i analyze strategic voting incentives in large elections with three candidates when voting takes place sequentially voters have perfect information about their private preferences but do not know the distribution from which other voters preferences are drawn if a candidate finishes last in an early voting round voters deduce that this candidate is likely to be less popular amongst the remaining voters and the remaining voters almost always have an incentive to stop voting for this candidate by contrast sincere voting equilibria can exist under either simultaneous voting or an early voting round of sequential voting without knife edge assumptions

multi player race abstract we present a model of race with multiple players and study players effort choices and expected prizes in equilibrium we show that in equilibrium once any two players win one battle each the remaining players do not exert any effort anymore this turns the continuation game into a two player race this is different than the results in previous two player models of race which report that all states of the game are reached with positive probabilities we also provide a set of comparative static results on the effects of the number of players and the victory threshold

first in first win evidence on schedule effects in round robin tournaments in mega events the order of actions in contests may have a significant effect on performance in this study we examine the role of the schedule in round robin tournaments with sequential games between three and four contestants our empirical analysis based on soccer fifa world cups and uefa european championships and on two olympic wrestling events reveals that there is a substantial advantage to the contestant who competes in the first and third matches our findings are in line with the hypothesis that winning probabilities in multi stage contests with sequential games are endogenously depending on the schedule of contests as predicted by game theoretical models we also discuss possible ways to reduce the effect of the schedule

recognition for sale abstract i examine the consequences of letting players compete for bargaining power in a multilateral bargaining game in each period the right to propose an offer is sold to the highest bidder and all players pay their bids if players vote according to any rule in which no player has veto power then the first proposer captures the entire surplus if a full consensus is needed for an offer to be accepted then the first proposer shares the surplus with at most one other player and as the period length between offers vanishes one player may capture virtually the entire surplus in settings with a stochastic or an endogenous surplus players are unwilling to efficiently delay agreement or invest in the surplus

research on china s rural household energy consumption household investigation of typical counties in 8 economic zones abstract rural household energy consumption is an important component of national energy consumption and plays an important role in rural social and ecological environment developments in this paper energy consumption of 1440 households in 8 typical counties of 8 china s economic zones was investigated the investigation data analysis revealed significant difference of different economic zones in rural household energy consumption level and structure for 8 studying counties the annual average energy consumption per capita was 26 7 gj 10 4 gj the lowest shanghang county and 86 6 gj the highest shulan county in energy consumption straw biogas fuel wood and electricity accounted for 44 33 23 13 12 79 and 9 61 respectively rural families with high incomes preferred commercial energies e g electricity and liquefied petroleum gas lpg to biomass energy e g straw and fuel wood the traditional biomass energy is still the main energy source for china s rural household research results provide references to understand current situations and future development of china s rural household energy consumption and formulate related energy and environmental policies