Prize Allocation in Contests with Size Effect through Prizes

Sanghack Lee; Shi Young Lee

doi:10.4236/tel.2012.22038

Home > Journals > Business & Economics > TEL

Theoretical Economics Letters > Vol.2 No.2, May 2012

Prize Allocation in Contests with Size Effect through Prizes ()

Sanghack Lee, Shi Young Lee

Department of International Commerce, Kookmin University, Seoul, Korea.
Division of Business, Chung-Ang University, Ansung, Korea.

DOI: 10.4236/tel.2012.22038 PDF HTML XML 6,197 Downloads 9,012 Views Citations

Abstract

We examine prize allocation in contests in which the number of contenders affects prizes. The government allocates a fixed prize between two groups of contenders. The prize share of each group is determined endogenously through the inter-group share contest. Then, the contenders in each group respectively compete for the prize. Examining prize allocation in such contests, we obtain the following results. The contenders expend more resources when they cooperate than when they contribute non-cooperatively in the inter-group share contest. The size effect through prizes increases the prize share of the larger group. The larger group can even obtain the larger share if the size effect through prizes is sufficiently strong.

Keywords

Contest; Prize Allocation; Endogenous Prize Share; Size Effect

Share and Cite:

S. Lee and S. Lee, "Prize Allocation in Contests with Size Effect through Prizes," Theoretical Economics Letters, Vol. 2 No. 2, 2012, pp. 212-215. doi: 10.4236/tel.2012.22038.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	R. D. Congleton, A. L. Hillman and K. A. Konrad, “40 Years of Research on Rent Seeking 1,” Springer-Verlag, Berlin, 2008. doi:10.1007/978-3-540-79247-5
[2]	K. A. Konrad, “Strategy and Dynamics in Contests,” Oxford University Press, Oxford, 2009.
[3]	S. Lee, “Contests with Size Effects through Costs,” European Journal of Political Economy, Vol. 23, No. 4, 2007, pp. 1190-93. doi:10.1016/j.ejpoleco.2006.08.002
[4]	W. Eggert and M. Kolmar, “Contests with Size Effects,” European Journal of Political Economy, Vol. 22, No. 4, 2006, pp. 989-1008. doi:10.1016/j.ejpoleco.2005.06.005
[5]	E. Katz and J. Tokatlidu, “Group Competition for Rents,” European Journal of Political Economy, Vol. 12, No. 4, 1996, pp. 599-607. doi:10.1016/S0176-2680(96)00027-4
[6]	M. Grad-stein and K. Konrad, “Orchestrating Rent Seeking Contests,” Economic Journal, Vol. 109, 1999, pp. 536-545. doi:10.1111/1468-0297.00461
[7]	M. Gradstein, “Optimal Contest Design: Volume and Timing of Rent Seeking in Con-test,” European Journal of Political Economy, Vol. 14, No. 4, 1998, pp. 575-585. doi:10.1016/S0176-2680(98)00026-3