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Complementarity in contests
Journal article   Open access   Peer reviewed

Complementarity in contests

Stergios Skaperdas and Constantinos Syropoulos
European Journal of Political Economy, v 14(4), pp 667-684
01 Nov 1998
DOI: https://doi.org/10.1016/S0176-2680(98)00031-7
url
http://www.socsci.uci.edu/~sskaperd/Skaperdasvaidya0608.pdfView
SubmittedOpen Access (License Unspecified),  Open

Abstract

Complementarities Conflict Rent-seeking
To facilitate the study of contests in general equilibrium, we examine winner-take-all contests in which the prize is complementary to the effort of the contestants, as inputs are in production functions or final goods in utility functions. We focus on the effects of technological factors and endowments on the effort and the welfare of the contestants. Most of our findings differ considerably from the standard model of contests in which prize and effort are independent. In particular, we find a critical role for the elasticity of substitution between prize and effort. For example, under low elasticities of substitution, a higher prize reduces the effort exerted by the contestants.

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