Investment Behaviour in a Two-Period Contest Model - 10.1628/093245609789471998 - Mohr Siebeck
Economics

Martin Grossmann, Helmut Dietl

Investment Behaviour in a Two-Period Contest Model

Volume 165 () / Issue 3, pp. 401-417 (17)

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This paper presents a two-period model of talent investments in which two clubs compete for a contest prize. We show that multiple equilibria are possible, using a closed-loop approach with strictly convex costs: The large-market club invests in both periods more than the small-market club or the small-market club invests in both periods more than the large-market club. In the case of an open-loop approach with strictly convex costs, however, the large-market club always invests more. The open-loop and closed-loop equilibria coincide if costs are linear.
Authors/Editors

Martin Grossmann No current data available.

Helmut Dietl No current data available.