Using state-by-state voting data for U.S. presidential elections, we observe that voter turnout is a positive function of predicted closeness. To explain the strategic component of political participation, we develop a follow-the-leader model. Political leaders expend effort according to their chance of being pivotal, which depends on the expected closeness of the race (at both state and national levels) and how voters respond to their effort. Structural estimation supports this model. For example, a 1-percent increase in the predicted closeness at the state level stimulates leaders' efforts, which increases turnout by 0.34 percent. (JEL D72, C33, C72, H41)

In declining industries capacity must be reduced in order to restore profitability. Who bears this burden? Where production is all or nothing, there is a unique subgame-perfect equilibrium: the largest firms exit first [Ghemawat and Nalebuff, 1985]. In this paper firms continuously adjust capacity. Again, there is a unique subgame-perfect equilibrium. All else equal, large firms reduce capacity first, and continue to do so until they shrink to the size of their formerly smaller rivals. Intuitively, bigger firms have lower marginal revenue and correspondingly greater incentives to reduce capacity. This prediction is supported by empirical findings.

Not only can competition provide a basis of comparison, which enables the design of reward structures that can simultaneously provide a high level of incentives with relatively low level risk; but compensation schemes based on relative performance have the further advantage of automatically adjusting incentives to changes in the economic environment.