scholarly journals Transitional Dynamics in a Tullock Contest with a General Cost Function

2010 ◽  
Author(s):  
Martin Grossmann ◽  
Markus Lang ◽  
Helmut M. Dietl
Keyword(s):  
Cost Function ◽  
Transitional Dynamics ◽  
Tullock Contest

scholarly journals Transitional Dynamics in a Tullock Contest with a General Cost Function

2011 ◽  
Vol 11 (1) ◽  
Author(s):  
Martin Grossmann ◽  
Markus Lang ◽  
Helmut Dietl
Keyword(s):  
Steady State ◽  
Cost Function ◽  
Open Loop ◽  
Discount Factor ◽  
Speed Of Convergence ◽  
Transitional Dynamics ◽  
Constant Elasticity ◽  
Depreciation Rate ◽  
Tullock Contest ◽  
Asset Stocks

This paper constructs and analyzes open-loop equilibria in an infinitely repeated Tullock contest in which two contestants contribute efforts to accumulate individual asset stocks over time. To investigate the transitional dynamics of the contest in the case of a general cost function, we linearize the model around the steady state. Our analysis shows that optimal asset stocks and their speed of convergence to the steady state crucially depend on the elasticity of marginal effort costs, the discount factor and the depreciation rate. In the case of a cost function with a constant elasticity of marginal costs, a lower discount factor, a higher depreciation rate and a lower elasticity imply a higher speed of convergence to the steady state. We further analyze the effects of second prizes in the contest. A higher prize spread increases individual and aggregate asset stocks, but does not alter the balance of the contest in the long run. During the transition, a higher prize spread increases asset stocks, produces a more balanced contest in each period and increases the speed of convergence to the steady state.

Estimacion de Economias de Escala en el Mercado de Tarjetas de Pago

2019 ◽  
Vol 12 (2) ◽  
pp. 86-92
Keyword(s):  
Cost Function ◽  
Economies Of Scale ◽  
Payment Methods ◽  
Per Se ◽  
Main Banks ◽  
Debit Cards

During the last years, the growth of transactions made through credit and debit cards has presented quite signif- icant increases both in number and in amounts. This paper studies the existence of economies of scale in the pro- cessing of such transactions, a situation that would exist if it were compatible with the existence of a single firm destined to the processing of said operations. The existence of a single firm for processing is not in itself a problem per se, which does generate problems for the competition is the structure of said firm, because for the period of time analyzed, its shareholder composition was composed of The main banks that issue these cards, but also have given them the function of being the acquirer of the merchants for these payment methods, which generates a vertically inte- grated structure, which creates competition problems in the market. After estimating the model indirectly from a cost function, this work determines the existence of economies of scale in the industry.

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