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Asymmetry And Collusion In Infinitely Repeated Contests

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  • J. Atsu Amegashie

    (Department of Economics, University of Guelph)

Abstract

I show that in an infinitely repeated contest, collusion is easier to sustain when the players are more equal than when they are less equal. Therefore, aggregate rent-seeking expenditures may be lower when the contestants are more equally matched. This is in sharp contrast to the standard result in static rent-seeking contests where increasing asymmetries between players reduce aggregate expenditures. I also discuss how this result has implications for signaling in contests with incomplete information.

Suggested Citation

  • J. Atsu Amegashie, 2005. "Asymmetry And Collusion In Infinitely Repeated Contests," Working Papers 0509, University of Guelph, Department of Economics and Finance.
    • Handle: RePEc:gue:guelph:2005-9
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    References listed on IDEAS

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    6. Gil Epstein & Shmuel Nitzan, 2006. "Reduced prizes and increased effort in contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 26(3), pages 447-453, June.
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    10. Christian Groh & Benny Moldovanu & Aner Sela & Uwe Sunde, 2012. "Optimal seedings in elimination tournaments," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(1), pages 59-80, January.
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    19. William Stein & Amnon Rapoport, 2005. "Symmetric two-stage contests with budget constraints," Public Choice, Springer, vol. 124(3), pages 309-328, September.
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    Cited by:

    1. Malin Arve & Olga Chiappinelli, 2021. "The Role of Budget Constraints in Sequential Elimination Tournaments," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(4), pages 1059-1087, October.
    2. J. Atsu Amegashie, 2005. "Signaling In A Dynamic Contest With Boundedly Rational Players," Working Papers 0510, University of Guelph, Department of Economics and Finance.

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    More about this item

    Keywords

    aggregate expenditures; asymmetry; collusion; folk theorem.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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