Innovation Contests with Entry Auction
Thomas Giebe ()
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich
We consider procurement of an innovation from heterogeneous sellers. Innovations are random but depend on unobservable effort and private information. We compare two procurement mechanisms where potential sellers first bid in an auction for admission to an innovation contest. After the contest, an innovation is procured employing either a fixed prize or a first-price auction. We characterize Bayesian Nash equilibria such that both mechanisms are payoff-equivalent and induce the same efforts and innovations. In these equilibria, signaling in the entry auction does not occur since contestants play a simple strategy that does not depend on rivals' private information.
Keywords: Contest; Auction; Innovation; Research; R\&D; Procurement; Signaling (search for similar items in EconPapers)
JEL-codes: D21 D44 D82 H57 O31 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-ino, nep-mic and nep-tid
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Journal Article: Innovation contests with entry auction (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:307
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