Outsourcing in Contests

Frode Meland and Odd Rune Straume

No 1658, CESifo Working Paper Series from CESifo

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, unless the ex-post bargaining strength of the contest winner is sufficiently low and/or there are very few contestants. However, even in the case of two contestants, outsourcing reduces the procurement costs of inducing a given level of effort if the contest organizer can collect entry fees. With respect to contest design, this suggests that outsourcing should generally be allowed if the objective is to induce stronger competition.

Keywords: contests; outsourcing; bargaining; contest design (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cse
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Outsourcing in contests (2007)
Working Paper: Outsourcing in Contests (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1658

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