We show that the presence of loss aversion on the part of participantsin a Tullock imperfectly discriminating contest will significantlyreduce the proportion of the rent dissipated in the form of resourcesused up in the competition for that rent...

Noncooperative games in which each player’s payo¤ function depends on anadditively separable function of every player’s choice variable may be transformedinto an aggregative game, which may be analysed using the conceptof ‘share functions’. The resulting approach avoids the...

We investigate the Nash equilibria of asymmetric, winner-take-all, imperfectlydiscriminating contests, focussing on existence, uniqueness and rentdissipation. When the contest success function is determined by a productionfunction with decreasing returns for each contestant, equilibria...

The paper proves that in two-player logit form symmetric contestswith concave success function, commitment to a particular strategydoes not increase a player's payo, while in contests with more thantwo players it does. The paper also provides a contest-like game inwhich commitment does not...

We provide a theoretical justification for bi-sourcing, which refers to thesituation where a final goods producer buys an input from an outside supplier and alsoproduces it in-house. Bi-sourcing occurs if the marginal cost of producing the input inhouseis higher than the marginal cost of outside...

We examine a Stackelberg game where a financially constrainedleader faces competition from a ‘deep pocket’ follower. We analyzethe consequences of this trade-off between a financial and a strategicadvantage for both the design of financial contracts and market structure.We derive conditions...

We show the effects of Bertrand and Cournot competition on R&D investmentand social welfare in a duopoly with R&D competition where success in R&D isprobabilistic. We show that R&D investments are higher under Bertrand (Cournot)competition when R&D productivities are sufficiently low (high), and...

This paper considers welfare effects of entry when the incumbent firmbehaves like a Stackelberg leader in the product market. In contrast to previous work(Klemperer, 1988, Journal of Industrial Economics), we show that entry may alwaysincrease welfare. Using general demand function, we show the...

If households and firms face different interest rates, there may be mutual gains in forming seniority wage contracts, which facilitate implicit saving by younger workers, who might otherwise save either little or nothing at all at low interest rates. A three-period OLG model is presented with...

We show the welfare effects of entry in presence of technology licensingunder Cournot competition. If the entrant is technologically inferior to that of theincumbent then, though licensing reduces (or completely eliminates) excessive entryfor relatively low entry costs, it creates excessive...