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Intrafirm conflicts and interfirm competition

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  • Güth, Werner
  • Pull, Kerstin
  • Stadler, Manfred

Abstract

We study strategic interfirm competition allowing for internal conflicts in each seller firm. Intrafirm conflicts are captured by a multi-agent framework with principals implementing a revenue sharing scheme. For a given number of agents, interfirm competition leads to a higher revenue share for the agents, higher equilibrium effort levels and higher agent utility, but lower profits for the firms. The winners from antitrust policy are thus not only the consumers but also the agents employed by the competing firms. --

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Bibliographic Info

Paper provided by University of Tuebingen, Faculty of Economics and Social Sciences in its series University of Tuebingen Working Papers in Economics and Finance with number 14.

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Date of creation: 2011
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Handle: RePEc:zbw:tuewef:14

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Keywords: agency theory; strategic interfirm competition; revenue sharing;

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References

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  1. Lin, Ming-Jen, 2008. "External market condition and tournaments: Theory and evidence," Economics Letters, Elsevier, vol. 99(1), pages 75-78, April.
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  5. Fershtman, Chaim, 1985. "Managerial incentives as a strategic variable in duopolistic environment," International Journal of Industrial Organization, Elsevier, vol. 3(2), pages 245-253, June.
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  7. Werner Güth & Rene Levínský & Kerstin Pull & Ori Weisel, 2010. "Tournaments and Piece Rates Revisited: A Theoretical and Experimental Study of Premium Incentives," Jena Economic Research Papers 2010-039, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  8. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
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  13. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
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Cited by:
  1. Hildenbrand, Andreas & Duran, Mihael, 2013. "The role of managerial work in market performance: A monopoly model with team production," University of Tuebingen Working Papers in Economics and Finance 66, University of Tuebingen, Faculty of Economics and Social Sciences.
  2. Güth, Werner & Pull, Kerstin & Stadler, Manfred, 2014. "Delegation, worker compensation, and strategic competition," University of Tuebingen Working Papers in Economics and Finance 67, University of Tuebingen, Faculty of Economics and Social Sciences.

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