Competition within firms
AbstractWe investigate the role of incentives set by a parent firm for competition among its subsidiaries. In a Cournot experiment four subsidiaries of the same parent operate in the same market. Parents earn a specific share of the joint profit and can choose how to distribute the remaining surplus (or loss). Results show that parents allocating profits equally among their subsidiaries reach outcomes close to collusion. However, almost half of the parent firms employ a proportional sharing rule instead. These groups end up with profits around the Cournot level.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Thurgauer Wirtschaftsinstitut, Universität Konstanz in its series TWI Research Paper Series with number 62.
Date of creation: 2010
Date of revision:
Cournot Competition; Subsidiary; Subcompany; Experiment;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-04 (All new papers)
- NEP-BEC-2010-12-04 (Business Economics)
- NEP-COM-2010-12-04 (Industrial Competition)
- NEP-CSE-2010-12-04 (Economics of Strategic Management)
- NEP-EXP-2010-12-04 (Experimental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andersson, Ola & Wengström, Erik, 2004.
"Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies,"
2004:14, Lund University, Department of Economics, revised 13 Sep 2004.
- Ola Andersson & Erik Wengström, 2007. "Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(2), pages 321-339, 06.
- Pedro Rey-Biel, 2008.
"Inequity Aversion and Team Incentives,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 110(2), pages 297-320, 06.
- Pedro Rey-Biel, 2007. "Inequity Version and Team Incentives," UFAE and IAE Working Papers 677.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Pedro Rey Biel, 2004. "Inequity aversion and team incentives," Microeconomics 0407009, EconWPA.
- Pedro Rey-Biel, 2007. "Inequity Aversion and Team Incentives," Working Papers 319, Barcelona Graduate School of Economics.
- Steffen Huck & Wieland Müller & Hans-Theo Norman, 2000.
"Strategic Delegation in Experimental Markets,"
CESifo Working Paper Series
290, CESifo Group Munich.
- Huck, S. & Müller, W. & Normann, H.T., 2004. "Strategic delegation in experimental markets," Open Access publications from Tilburg University urn:nbn:nl:ui:12-140880, Tilburg University.
- Huck, Steffen & Müller, Wieland & Normann, Hans-Theo, 2000. "Strategic delegation in experimental markets," SFB 373 Discussion Papers 2000,39, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- 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.
- 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.
- Gary Bornstein & Uri Gneezy, 2002. "Price Competition Between Teams," Experimental Economics, Springer, vol. 5(1), pages 29-38, June.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001.
"Two are Few and Four are Many: Number Effects in Experimental Oligopolies,"
Bonn Econ Discussion Papers
bgse12_2001, University of Bonn, Germany.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
- Raab, Philippe & Schipper, Burkhard C., 2009.
"Cournot competition between teams: An experimental study,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 72(2), pages 691-702, November.
- Philippe Raab & Burkhard C. Schipper, 2004. "Cournot Competition between Teams: An Experimental Study," Bonn Econ Discussion Papers bgse13_2004, University of Bonn, Germany.
- Burkhard C. Schipper & Philippe Raab, 2006. "Cournot Competition between Teams: An Experimental Study," Working Papers 626, University of California, Davis, Department of Economics.
- Raab, Philippe & Schipper, Burkhard C., 2007. "Cournot Competition between Teams: An Experimental Study," Working Papers 06-26, University of California at Davis, Department of Economics.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ulrich Wacker).
If references are entirely missing, you can add them using this form.