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http://ssrn.com/abstract=1316275
 
 

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Multi-Prize Contests as Incentive Mechanisms for the Provision of Public Goods with Heterogenous Agents


Martin Kolmar


University of St. Gallen - Institute of Economy and the Environment (IWOe-HSG); CESifo (Center for Economic Studies and Ifo Institute)

Dana Sisak


Erasmus University Rotterdam (EUR) - Department of Economics; Tinbergen Institute

October 16, 2008

U. of St. Gallen Law & Economics Working Paper No. 2008-26

Abstract:     
We analyze if and how multi-prize Tullock contests can be used to guarantee efficient contributions to a public good when agents are heterogenous both with respect to the costs of production of the public good and with respect to the utility from its consumption. With two types of individuals, efficiency can be guaranteed if the following conditions are met: (i) the contest designer can use at least two prizes different from zero, (ii) there is a sufficient number of individuals of each type or types are sufficiently similar and (iii) the reservation utility of the individuals resulting from non-participation is sufficiently low. For a large class of problems it turns out that the optimal prize structure is not monotonic.

Number of Pages in PDF File: 29

Keywords: Public Goods, Contests

JEL Classification: D74, H41, H70, K42

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Date posted: December 18, 2008  

Suggested Citation

Kolmar, Martin and Sisak, Dana, Multi-Prize Contests as Incentive Mechanisms for the Provision of Public Goods with Heterogenous Agents (October 16, 2008). U. of St. Gallen Law & Economics Working Paper No. 2008-26. Available at SSRN: http://ssrn.com/abstract=1316275 or http://dx.doi.org/10.2139/ssrn.1316275

Contact Information

Martin Kolmar (Contact Author)
University of Saint Gallen - Institute of Economy and the Environment (IWOe-HSG) ( email )
Varnbüelstrasse 14
CH-9000 St. Gallen
Switzerland
+41 (0)71 224 25 35 (Phone)
+41 (0)71 224 23 02 (Fax)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Dana Sisak
Erasmus University Rotterdam (EUR) - Department of Economics ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
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