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Contests with Externalities

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Authors
Lee, Sanghack
Issue Date
2000-04
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.13 No.2, pp. 123-134
Keywords
Contestexternalitysocial optimum
Abstract
This paper examines contests in which aggregate efforts generate positive externalities to participants . In such contests the equilibrium effort may exceed or fall short of the socially optimal level of effort. This paper derives the relationship between the equilibrium effort, the size of prize, and the socially optimal level of effort. The equilibrium effort proves to exceed the social optimum when it is less than the prize times the exponent R of the Tullock (1980) contest-success function. On the other hand, when the equilibrium effort is greater than the prize times the exponent R, it indeed falls short of the social optimum.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1203
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.13(2) (Summer 2000)
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