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Cournot Competition between Teams: An Experimental Study

  • Burkhard C. Schipper
  • Philippe Raab

    (Department of Economics, University of California Davis)

In the economic literature on market competition, firms are often modelled 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 team-firms and individual firms are behaviorally equivalent. This provides a theoretical foundation for the unitary player assumption in Cournot competition. We show that this assumption is robust in experiments, which is in contrast to experimental results on price competition.

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Paper provided by University of California, Davis, Department of Economics in its series Working Papers with number 626.

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Length: 29
Date of creation: 22 Sep 2006
Date of revision:
Handle: RePEc:cda:wpaper:06-26
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