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[ Article ] | |
Seoul Journal of Economics - Vol. 32, No. 3, pp. 323-336 | |
Abbreviation: SJE | |
ISSN: 1225-0279 (Print) | |
Print publication date 31 Aug 2019 | |
Received 21 Jan 2019 Revised 16 May 2019 Accepted 09 Jun 2019 | |
Contests with Linear Externality in Prizes | |
Sung-Hoon Park ; Sanghack Lee
| |
Sung-Hoon Park, Professor, Department of Economics, Chosun University, 309 Pilmun-daero, Dong-gu, Gwangju, 501-759, South Korea, Tel: +82-62-230-6839 (park@chosun.ac.kr) | |
Sanghack Lee, Corresponding author, Professor, Department of International Commerce, Kookmin University, 77 Jeongneung-ro, Seongbuk-gu, Seoul 136-702, South Korea, Tel: +82-2-910-4546 (slee@kookmin.ac.kr) | |
JEL Classification: D72 |
This study examines contests in which prizes are affected linearly by aggregate effort. In particular, this research analyzes a contest among individuals as a benchmark to scrutinize the effects of prize externality and sharing-rule information on rent-dissipation rate and social welfare. Thereafter, the current study investigates two types of group contest with linear prize externality: one with private information on intra-group sharing rules and the other with public information on intra-group sharing rules. Results indicate as follows. (1) An increase in prize externality increases rent-dissipation rate but has no effect on social welfare. (2) The group contest with private information on sharing rules yields higher social welfare and lower rent-dissipation rate than the one with public information on sharing rules.
Keywords: Group contest, Linear externality in prize, Intra-group sharing rule, Private information on sharing rules, Public information on sharing rules |
We would like to thank an anonymous reviewer for constructive comments and suggestions. Any remaining errors are our own responsibility.
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