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Journal Article

Preemption contests between groups

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Konrad,  Kai A.
Public Economics, MPI for Tax Law and Public Finance, Max Planck Society;

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Citation

Barbieri, S., Konrad, K. A., & Malueg, D. A. (2020). Preemption contests between groups. RAND Journal of Economics, 51(3), 934-961.


Cite as: http://hdl.handle.net/21.11116/0000-0007-F464-5
Abstract
We consider a preemption game between competing groups; firms lobbying individually for their groups' interests provide an empirical example. Among symmetric groups, the first firm to take action bears an (unobserved) cost and wins the prize on behalf of its group. In equilibrium, the firm with the lowest cost takes action, but with delay. More competition and a smaller ratio of costs to benefits reduce delay. Firms in larger groups wait longer, but group action can occur earlier, as the probability of a low‐cost firm is higher. Asymmetries in group size or strength of externalities also matter.