The Generalized War of Attrition
University of Oxford - Department of Economics; Centre for Economic Policy Research (CEPR)
Stanford University; National Bureau of Economic Research (NBER)
Department of Economics Working Paper No. 1998-W1
We model a War of Attrition with N+K firms competing for N prizes. If firms must pay their full costs until the whole game ends, even after dropping out themselves (as in a standard-setting context), each firm's exit time is independent both of K and of other players' actions. If, instead, firms pay no costs after dropping out (as in a natural oligopoly), the field is immediately reduced to N+1 firms. Furthermore, in this limit it is always the K-1 lowest-value firms who drop out in zero time, even though each firm's value is private information to itself.
Number of Pages in PDF File: 24
JEL Classification: D43, D44, L13, O30working papers series
Date posted: April 8, 1999
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