Allocating ideas: Horizontal competition in tournaments

Juan-José Ganuza and Esther Hauk

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We develop a stylized model of horizontal and vertical competition in tournaments with two competing firms. The sponsor cares about the quality of the design but also about the design location. A priori not even the sponsor knows his preferred design location, which is only discovered once he has seen the actual proposals. We show that the more efficient firm is more likely to be conservative when choosing the design location. Also, to get some differentiation in design locations, the cost difference between contestants can neither be too small nor too big. Therefore, if the sponsor mainly cares about the design location, participation in the tournaments by the two lowest cost contestants cannot be optimal for the sponsor.

Keywords: Horizontal and vertical competition; tournaments (search for similar items in EconPapers)
JEL-codes: D44 D72 J31 L13 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Allocating Ideas: Horizontal Competition in Tournaments (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:594

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