Abstract: This paper examines the idea of a Tullock contest between competitors on a line (in the manner of Hotelling). The problem is modeled as a two stage game in which competitors choose location and then choose how much to invest in the contest. The model shows that competitors have a tendency to toward differentiation when the welfare optimum is agglomeration. The model is also used to examine the importance of the concept of “competitive balance” in the contest, which is frequently considered crucial in the sports contest.
Bio: Stefan Szymanski moved to the University of Michigan in the Fall of 2011 as Stephen J. Galetti Professor of Sports Management. Prior to this he taught at London Business School, Imperial Business School, Cass Business School, all in London. His primary interest is the economics of professional and amateur sports. He has published widely in scholarly journals including the Journal of Political Economy and the Journal of Economic Literature, and his recent book Soccernomics (co-authored with Simon Kuper) made it into the New York Times bestseller list during the World Cup 2010.