Empirical Evidence on Competition and Revenue in an All-Pay Contest

Zhongmin Wang () and Minbo Xu ()
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Zhongmin Wang: Resources for the Future
Minbo Xu: Beijing Normal University

Review of Industrial Organization, 2016, vol. 49, issue 3, No 2, 429-448

Abstract: Abstract The total revenue from an “all-pay contest” is the sum of expenditures from all individual players, so it is important to ask whether it increases with the number of actual players—which is our definition of competition. This is the first paper to use field data to study this question empirically. Using novel instrumental variables, we document strong empirical evidence that the revenue of a penny auction—which is a form of all-pay contest that recently emerged on the Internet—increases with the number of bidders. Our findings cast doubt on the standard model of all-pay contests that presumes that all bidders are fully informed.

Keywords: All-pay contest; Competition; Number of bidders; Penny auction; Revenue (search for similar items in EconPapers)
JEL-codes: D03 D44 L81 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11151-016-9511-6

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