Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 06/2008: King of the Hill: Positional Dynamics in Contests

Halvor Mehlum () and Karl Moene ()
Additional contact information
Halvor Mehlum: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Karl Moene: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: In a contest with positional dynamics between an incumbent and a challenger i) inequality of power may magnify conflicts, ii) more severe conflicts can go together with lower turnover of incumbents, and iii) power can be self defeating as cost advantages can reduce pay-offs. These three propositions of our paper are contrary to the implications of static conflict models. They follow from incorporating positional dynamics into the standard static approach. Such positional dynamics are relevant for competition in battlefields, politics, and market places.

Keywords: Contests; political stability; war; incumbent advantage

JEL-codes: C73; D72; D74

26 pages, February 1, 2008

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