From monopoly to competition: When do optimal contests prevail?

Xiaotie Deng; Yotam Gafni; Ron Lavi; Tao Lin; Hongyi Ling

doi:10.1016/j.geb.2025.07.001

From monopoly to competition: When do optimal contests prevail?

Xiaotie Deng
, Yotam Gafni
, Ron Lavi
, Tao Lin^*
, Hongyi Ling

^*Corresponding author for this work

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

1 Citation (Scopus)

Abstract

We study competition among multiple contest designers in a general model. The goal of each contest designer is to maximize the sum of efforts of the contestants participating in their contest. Assuming symmetric contestants, our main result shows that the optimal contests in the monopolistic setting (i.e., those that maximize the sum of efforts in a model with a single contest designer) form an equilibrium in the model with competition. Under a very natural assumption, these contests are dominant, and the equilibrium that they form is unique. Moreover, the equilibria with the optimal contests are Pareto-optimal even when other equilibria emerge. In many natural cases, they also maximize the social welfare. Additional examples show that, with further generalizations of our model, optimal contests no longer prevail. Our results therefore highlight and clarify the borderline between settings in which optimal contests prevail and do not prevail. © 2025 Elsevier Inc.

Original language	English
Pages (from-to)	268-293
Journal	Games and Economic Behavior
Volume	153
Online published	11 Jul 2025
DOIs	https://doi.org/10.1016/j.geb.2025.07.001
Publication status	Published - Oct 2025
Externally published	Yes

Funding

The authors declare the following financial interests/personal relationships which may be considered as potential competing interests: Xiaotie Deng reports financial support was provided by National Natural Science Foundation of China. Ron Lavi reports financial support was provided by Israel Science Foundation. Yotam Gafni reports financial support was provided by European Research Council.Xiaotie Deng was supported by National Natural Science Foundation of China (grant No. NSFC-ISF 61761146005) and Ron Lavi was supported by Israel Science Foundation, under an NSFC-ISF joint research program (grant No. NSFC-ISF 61761146005). Yotam Gafni was supported by the European Research Council (ERC) under the European Union's Horizon 2020 research and innovation program (grant No. 740435).

Research Keywords

All-pay auction
Competition among contests
Contest design
Tullock contest

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title = "From monopoly to competition: When do optimal contests prevail?",

abstract = "We study competition among multiple contest designers in a general model. The goal of each contest designer is to maximize the sum of efforts of the contestants participating in their contest. Assuming symmetric contestants, our main result shows that the optimal contests in the monopolistic setting (i.e., those that maximize the sum of efforts in a model with a single contest designer) form an equilibrium in the model with competition. Under a very natural assumption, these contests are dominant, and the equilibrium that they form is unique. Moreover, the equilibria with the optimal contests are Pareto-optimal even when other equilibria emerge. In many natural cases, they also maximize the social welfare. Additional examples show that, with further generalizations of our model, optimal contests no longer prevail. Our results therefore highlight and clarify the borderline between settings in which optimal contests prevail and do not prevail. {\textcopyright} 2025 Elsevier Inc.",

keywords = "All-pay auction, Competition among contests, Contest design, Tullock contest",

author = "Xiaotie Deng and Yotam Gafni and Ron Lavi and Tao Lin and Hongyi Ling",

year = "2025",

month = oct,

doi = "10.1016/j.geb.2025.07.001",

language = "English",

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TY - JOUR

T1 - From monopoly to competition

T2 - When do optimal contests prevail?

AU - Deng, Xiaotie

AU - Gafni, Yotam

AU - Lavi, Ron

AU - Lin, Tao

AU - Ling, Hongyi

PY - 2025/10

Y1 - 2025/10

N2 - We study competition among multiple contest designers in a general model. The goal of each contest designer is to maximize the sum of efforts of the contestants participating in their contest. Assuming symmetric contestants, our main result shows that the optimal contests in the monopolistic setting (i.e., those that maximize the sum of efforts in a model with a single contest designer) form an equilibrium in the model with competition. Under a very natural assumption, these contests are dominant, and the equilibrium that they form is unique. Moreover, the equilibria with the optimal contests are Pareto-optimal even when other equilibria emerge. In many natural cases, they also maximize the social welfare. Additional examples show that, with further generalizations of our model, optimal contests no longer prevail. Our results therefore highlight and clarify the borderline between settings in which optimal contests prevail and do not prevail. © 2025 Elsevier Inc.

AB - We study competition among multiple contest designers in a general model. The goal of each contest designer is to maximize the sum of efforts of the contestants participating in their contest. Assuming symmetric contestants, our main result shows that the optimal contests in the monopolistic setting (i.e., those that maximize the sum of efforts in a model with a single contest designer) form an equilibrium in the model with competition. Under a very natural assumption, these contests are dominant, and the equilibrium that they form is unique. Moreover, the equilibria with the optimal contests are Pareto-optimal even when other equilibria emerge. In many natural cases, they also maximize the social welfare. Additional examples show that, with further generalizations of our model, optimal contests no longer prevail. Our results therefore highlight and clarify the borderline between settings in which optimal contests prevail and do not prevail. © 2025 Elsevier Inc.

KW - All-pay auction

KW - Competition among contests

KW - Contest design

KW - Tullock contest

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UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-105010933421&origin=recordpage

U2 - 10.1016/j.geb.2025.07.001

DO - 10.1016/j.geb.2025.07.001

M3 - RGC 21 - Publication in refereed journal

SN - 0899-8256

VL - 153

SP - 268

EP - 293

JO - Games and Economic Behavior

JF - Games and Economic Behavior

ER -

From monopoly to competition: When do optimal contests prevail?

Abstract

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Research Keywords

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