The Generalized War of Attrition
- (pp. 175-189)
AbstractThe authors model a war of attrition with N+K firms competing for N prizes. In a 'natural oligopoly' context, the K - 1 lowest-value firms drop out instantaneously, even though each firm's value is private information to itself. In a 'standard setting' context, in which every competitor suffers losses until a standard is chosen, even after giving up on its own preferred alternative, each firm's exit time is independent both of K and of other players' actions. The authors' results explain how long it takes to form a winning coalition in politics. Solving the model is facilitated by the revenue equivalence theorem.
CitationBulow, Jeremy, and Paul Klemperer. 1999. "The Generalized War of Attrition." American Economic Review, 89 (1): 175-189. DOI: 10.1257/aer.89.1.175
- C13 Estimation
- D43 Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
- O31 Innovation and Invention: Processes and Incentives