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The gap between equilibrium expected payoffs in contests with linear externalities

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  • Sung-Hoon Park

    (Chosun University)

Abstract

Two-player Tullock-type contests with linear externalities are classified into two, those with cost externality and those with rent externality. We consider the players' symmetric externalities and their asymmetric abilities and examine the gap between their equilibrium expected payoffs. We find that (1) in the two types of contests, the expected payoff is larger for the favorite than for the underdog, (2) in the cost-externality contest, the gap between the players' expected payoffs is constant regardless of changes in extent of externalities, and (3) in the contest with rent externality, the gap increases when it becomes more enhanced with externalities.

Suggested Citation

  • Sung-Hoon Park, 2019. "The gap between equilibrium expected payoffs in contests with linear externalities," Economics Bulletin, AccessEcon, vol. 39(4), pages 2302-2307.
    • Handle: RePEc:ebl:ecbull:eb-19-00612
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    References listed on IDEAS

    as
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    Cited by:

    1. Sung-Hoon Park & Jason F. Shogren, 2021. "A Virtuous Circle of Governance Contests with Externalities," Sustainability, MDPI, vol. 13(14), pages 1-12, July.

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    More about this item

    Keywords

    asymmetric abilities; contests; cost and rent externalities; expected payoffs;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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