Quantity Competition, Endogenous Motives and Behavioral Heterogeneity
AbstractThe paper shows that strategic quantity competition can be characterized by behavioral heterogeneity, once competing firms are allowed in a pre-market stage to optimally choose the behavioral rule they will follow in their strategic choice of quantities. In particular, partitions of the population of identical firms in profit maximizers and relative profit maximizers turn out to be deviation-proof equilibria, both in simultaneous and sequential game structures. Our findings that in a strategic framework heterogeneous behavioral rules are consistent with individual incentives provides a game-theoretic microfoundation of heterogeneity.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24165.
Date of creation: Jul 2010
Date of revision:
Behavioral Heterogeneity; Endogenous Motives; Relative Performance; Multistage Games; Quantity Competition.;
Other versions of this item:
- Alessandra Chirco & Caterina Colombo & Marcella Scrimitore, 2013. "Quantity competition, endogenous motives and behavioral heterogeneity," Theory and Decision, Springer, Springer, vol. 74(1), pages 55-74, January.
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-06 (All new papers)
- NEP-BEC-2010-08-06 (Business Economics)
- NEP-COM-2010-08-06 (Industrial Competition)
- NEP-CSE-2010-08-06 (Economics of Strategic Management)
- NEP-EVO-2010-08-06 (Evolutionary Economics)
- NEP-IND-2010-08-06 (Industrial Organization)
- NEP-MIC-2010-08-06 (Microeconomics)
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