Competition Between Differentiated Sellers-Exploding and Open Offers

部分内容如下：

Competition Between Differentiated Sellers:
Exploding and Open Offers
Hongjun Zhong∗
School of Economics
Shanghai University of Finance and Economics
15 July 2007
Abstract
We study competition with exploding offer and open offers between differentiated
sellers in a simple model. We find that sellers prefer the strong seller
moves first with exploding offer to open offer. But if offer is known to be exploding,
then both sellers prefer to be a follower. However, stronge seller can
always manage to lobby weak seller to wait and pay some compensation and
there is always an exploding offers equilibrium in which strong seller makes
offer first. This finding explains why in the labor market big companies often
make recruit decision first. This study also sheds some new light on the recent
work on the competition between sellers.
Keywords: Exploding Offer, Open Offer, Auction, Competing Sellers.
JEL Classification: D44.
1 Introduction
Many type of labor contracts are observed in the real world. The competition between
employees and how to design an incentive contract to motivate employees have been
studied extensively (e.g. yardstick competition (Shleifer 1987) and exceutive payment
scheme (Jenson and Murphy 1990) and career concern (Dewatripont at al 1999)).
All these are important because the efficiency of an organization is crucial to the
success of it. Another reason that studies of labor contract mainly focuses on these
∗This paper is a revised version of my DPhil thesis. I am grateful to Ian Jewitt and Paul
Klemperer for their supervision and kind encouragement. Thanks also go to participants of the
Oxford Gorman workshop for their comments and suggestions. All errors are my own. Corresponding
address: School of Economics, Shanghai University of Finance and Economics, No. 777, Guoding
Road, 200433, Shanghai, China; Email: hjzhong@mail.shufe.edu.cn or flytoox@gmail.com
1
issues is that in the labor market, the supply side competition is far more intensive
than in the demand side. However, in the last twenty years, with the development
of the entainment and sports industry, which are mainly dominated by star players,
the competition between employers chasing for star players becomes more and more
intensive. Many clubs are often fighting with each other for those very talented players.
Inevitably, where will these star players will go often becomes headlines of many
medias. For example, you will find transfer rumors about David Beckham to the Real
Madrid club recently from almost any newspaper in UK1. While regular players are
competing with each other for a position in a good club, good clubs are competiting
with each other for star players likes Zidanine or Ronaldo. The competition between
clubs, in a sense, is like an ascending English auction market. Each club makes an
offer to targeted player and then other clubs make a higher offer until nobody is willing
to make a higher offer. However, this is not the whole story about the transfer
market. In the real world, clubs are able to reduce or constraint their competition
by many ways. A prime example is the professional league agreement, which bans
players to sign another contract with other clubs once they signed a contract with one
club. Similary, in the academia market, many university and research institutions are
fighting for few very talented young scientists.2