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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
Fax: +49 228 73 6884
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. Wieland Mueller & Fangfang Tan, 2011. "Who acts more like a game theorist? Group and individual play in a sequential market game and the effect of the time horizon," Vienna Economics Papers 1111, University of Vienna, Department of Economics.
  2. Andreas Hildenbrand, 2012. "Is a “Firm” a Firm? A Stackelberg Experiment," MAGKS Papers on Economics 201229, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. 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.
  4. Lisa Bruttel & Simeon Schudy, 2010. "Competition within firms," TWI Research Paper Series 62, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  5. 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).
  6. Michal Król, 2012. "‘Everything must go!’- Cournot as a Stable Convention within Strategic Supply Function Competition," The School of Economics Discussion Paper Series 1217, Economics, The University of Manchester.
  7. 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.

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