The Equivalence of Contests

ESRC Centre for Competition Policy Working Paper No. 10-5

20 Pages Posted: 14 May 2010

See all articles by Subhasish M. Chowdhury

Subhasish M. Chowdhury

University of Bath - Department of Economics

Roman M. Sheremeta

Case Western Reserve University

Date Written: December 2009

Abstract

We use a Tullock-type contest model to show that intuitively and structurally different contests can be strategically and revenue equivalent to each other. We consider a two-player contest, where outcome-contingent payoffs are linear functions of prizes, own effort, and the effort of the rival. We identify strategically equivalent contests that generate the same family of best response functions and, as a result, the same revenue. However, two strategically equivalent contests may yield different equilibrium payoffs. Finally, we discuss possible contest design applications and avenues for future theoretical and empirical research.

Keywords: Rent-seeking, contest, spillover, equivalence, revenue equivalence, contest design

JEL Classification: C72, D72, D74

Suggested Citation

Chowdhury, Subhasish M. and Sheremeta, Roman M., The Equivalence of Contests (December 2009). ESRC Centre for Competition Policy Working Paper No. 10-5. Available at SSRN: https://ssrn.com/abstract=1603968 or http://dx.doi.org/10.2139/ssrn.1603968

Subhasish M. Chowdhury (Contact Author)

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

HOME PAGE: http://https://sites.google.com/site/subhasishmc/

Roman M. Sheremeta

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

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