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Cournot competition between teams: An experimental study

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  • Raab, Philippe
  • Schipper, Burkhard C.

Abstract

In the literature on market competition, firms are often modeled as individual decision makers and the internal organization of the firm is neglected (unitary player assumption). However, as the literature on strategic delegation suggests, one cannot generally expect that the behavior of teams is equivalent to the behavior of individuals in Cournot competition. Nevertheless, there are models of team-organizations such that team-firms and individual firms are behaviorally equivalent. This provides a theoretical foundation for the unitary player assumption in Cournot competition. We show that this assumption is robust in experiments, which is in contrast to experimental results on price competition.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 2 (November)
Pages: 691-702

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:2:p:691-702

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Keywords: Unitary player assumption Group behavior Experiments Theory of the firm;

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Citations

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Cited by:
  1. Hildenbrand, Andreas, 2012. "Is a "firm" a firm? A Stackelberg experiment," Economics Discussion Papers 2012-53, Kiel Institute for the World Economy.
  2. Müller, Wieland & Tan, Fangfang, 2013. "Who acts more like a game theorist? Group and individual play in a sequential market game and the effect of the time horizon," Games and Economic Behavior, Elsevier, vol. 82(C), pages 658-674.
  3. Ronald Bosman & Heike Hennig-Schmidt & Frans Winden, 2006. "Exploring group decision making in a power-to-take experiment," Experimental Economics, Springer, vol. 9(1), pages 35-51, April.
  4. Max Albert & Andreas Hildenbrand, 2012. "Industrial organization in the laboratory," MAGKS Papers on Economics 201205, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  5. Gary Bornstein & David V. Budescu & Tamar Kugler & Reinhard Selten, 2002. "Repeated Price Competition Between Individuals and Between Teams," Discussion Paper Series dp303, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  6. Lisa Bruttel & Simeon Schudy, 2010. "Competition within firms," TWI Research Paper Series 62, Thurgauer Wirtschaftsinstitut, Universität Konstanz.

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