|
Archive@NYU >
Stern School of Business >
Economics Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26224
|
| Title: | Increasing Dominance With No Efficiency Effect |
| Authors: | Cabral, Luis M.B. |
| Keywords: | Dynamic competition
increasing dominance
e±ciency effect
R&D |
| Issue Date: | Aug-2000 |
| Series/Report no.: | EC-00-06 |
| Abstract: | I uncover a new force towards increasing dominance (the property
whereby, in dynamic games, the leader tends to increase her lead in
expected terms). The new effect results from the strategic choice of
covariance in races. I assume that players must choose not the amount of
resources to spend but how to allocate those resources. I show that the
laggard has an incentive to chose a different path from the leader. In
equilibrium, this results in the laggard choosing a less promising path,
in effect trading off lower expected value for lower correlation with
respect to the leader. This in turn leads to increasing dominance. In
order to make the point as clear as possible and differentiate it from
the forces previously characterized, I assume that no joint payoff (or
efficiency) effect is present. |
| URI: | http://hdl.handle.net/2451/26224 |
| Appears in Collections: | Economics Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
