Negative and Positive Effects of Competition in aPreemption Game

Agents compete to acquire a limited economic opportunity of uncertain protability.Each agent decides how much he acquires public signals before making investmentunder fear of preemption. I show that equilibria have various levels of e¢ ciency undermild competition. The e¤ect of competition on the equilibrium strategy is di¤erentdepending on which class of equilibrium we focus on. However, when competitivepressure is su¢ ciently high, there exists a unique equilibrium. Finally, I show thatthe e¤ect of competition on e¢ ciency is di¤erent between the common value and theprivate value setting. Strong competition leads to the least e¢ cient equilibrium forthe common value setting but e¢ ciency can be improved by competition in the privatevalue setting.

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Year of publication:	2010-08-16
Authors:	Suzuki, Toru
Institutions:	Max-Planck-Institut für Ökonomik <Jena> / Abteilung Strategische Interaktion
Subject:	Wettbewerb \| market microstructure \| Spieltheorie \| game theory \| Effizienz

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Extent:	475136 bytes 27 p. application/pdf
Series:	Abteilung Strategische Interaktion - Discussion Papers Jena Economic Research Papers 085(2010)
Type of publication:	Book / Working Paper
Language:	German
Classification:	C73 - Stochastic and Dynamic Games ; C83 - Survey Methods; Sampling Methods ; Subject matter and research method of business administration ; Individual Working Papers, Preprints ; No country specification
Source:	USB Cologne (business full texts)