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Preemption contests between groups
Author(s) -
Barbieri Stefano,
Konrad Kai A.,
Malueg David A.
Publication year - 2020
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12345
Subject(s) - preemption , externality , microeconomics , competition (biology) , economics , action (physics) , group (periodic table) , collective action , industrial organization , business , computer science , ecology , chemistry , physics , organic chemistry , quantum mechanics , politics , political science , law , biology , operating system
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.