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Cournot Competition between Teams: An Experimental Study

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  • Philippe Raab
  • Burkhard C. Schipper

Abstract

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

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Bibliographic Info

Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse13_2004.

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Length: 30
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:bon:bonedp:bgse13_2004

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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
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Web page: http://www.bgse.uni-bonn.de

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Keywords: unitary player assumption; experiments; group behavior; theory of the firm;

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Citations

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Cited by:
  1. 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.
  2. 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).
  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. Bornstein, Gary & Kugler, Tamar & Budescu, David V. & Selten, Reinhard, 2008. "Repeated price competition between individuals and between teams," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 808-821, June.
  5. Bruttel, L. & Schudy, Simeon, 2012. "Competition within firms," Munich Reprints in Economics 19990, University of Munich, Department of Economics.
  6. Hildenbrand, Andreas, 2013. "Is a firm a firm? A Stackelberg experiment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 7(20), pages 1-26.

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