Outsourcing in contests

Frode Meland and Odd Rune Straume

Public Choice, 2007, vol. 131, issue 3, 315-331

Abstract: We study ex post outsourcing of production in an imperfectly discriminating contest, interpreted here as a research tournament or a procurement contest for being awarded some production contract. We find that the possibility of outsourcing increases competition between the contestants, leading to higher total contest effort, if the contest winner is expected to obtain a sufficiently large share of ex post outsourcing rents. Under reasonable assumptions, outsourcing tends also to increase the number of active contestants, strengthening the case for outsourcing to increase total contest effort. If such effort is socially wasteful, outsourcing creates a welfare trade-off between ex ante and ex post efficiency. Copyright Springer Science+Business Media, LLC 2007

Keywords: Contests; Non-price competition; Outsourcing (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (6)

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Working Paper: Outsourcing in Contests (2006)
Working Paper: Outsourcing in Contests (2005)
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DOI: 10.1007/s11127-006-9117-x

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