Outsourcing in Contests

Frode Meland () and Odd Rune Straume
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Frode Meland: Herman Fossgt. 6, N-5007 Bergen, Norway, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway, http://www.uib.no/persons/Frode.Meland

No 09/05, Working Papers in Economics from University of Bergen, Department of Economics

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 there are very few contestants and/or the ex-post bargaining strength of the contest winner is sufficiently low. 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)
JEL-codes: D44 L23 L24 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005-04-05
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Outsourcing in contests (2007)
Working Paper: Outsourcing in Contests (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:bergec:2005_009

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