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1777 The Role of Budget Contraints in Sequential Elimination Tournaments Malin Arve, Olga Chiappinelli 2018 41 S.

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Abstract:

Motivated by the EU concept of Pre-Commercial Procurement and the massivepresence of SMEs in the European economy, we study how budget constraints affect R&D effort in sequential elimination tournaments. We show that introducingbudget constraints leads to a non-monotonicity in unconstrained contestants' effort.Furthermore, we show that if the budget asymmetry is not too large, unconstrainedcontestants exert higher effort than when faced with unconstrained contestants only.

JEL-Classification:

D72;H57

Keywords:

Pre-commercial procurement, contests, budget constraints