Fixed-prize tournaments versus first-price auctions in innovation contests

Anja Schöttner

No 2005-041, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: This paper analyzes a procurement setting with two identical firms and stochastic innovations. In contrast to the previous literature, I show that a procurer who cannot charge entry fees may prefer a fixed-prize tournament to a first-price auction since holding an auction may leave higher rents to firms when the innovation technology is subject to large random factors.

Keywords: innovation contest; auction; tournament; quality (search for similar items in EconPapers)
JEL-codes: D44 H57 L15 (search for similar items in EconPapers)
Date: 2005
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Journal Article: Fixed-prize tournaments versus first-price auctions in innovation contests (2008)
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