Budget or target: The choice between input and output strategies

Nolan H. Miller, Amit I. Pazgal

Research output: Contribution to journalArticlepeer-review

Abstract

In many competitive environments, players need to commit either to a specific goal they will achieve (an output target) or to the resources they are willing to expend in pursuit of that goal (an input budget). We model this situation as a two-stage game where players may compete either by setting input and letting their output follow from the environment ("leading input"), or by setting output and letting the input levels required to support the output targets follow ("leading output"). We show that when each player's output is increasing (decreasing) in his rival's input, leading input (output) dominates leading output (input).

Original languageEnglish (US)
Pages (from-to)391-415
Number of pages25
JournalRAND Journal of Economics
Volume37
Issue number2
DOIs
StatePublished - 2006
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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