Competition within firms
We 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.
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|Date of creation:||2012|
|Date of revision:|
|Publication status:||Published in Journal of Competition Law and Economics 1 8(2012): pp. 167-185|
|Contact details of provider:|| Postal: Ludwigstr. 28, 80539 Munich, Germany|
Web page: http://www.vwl.uni-muenchen.de
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- Huck, S. & Müller, W. & Normann, H.T., 2004.
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Other publications TiSEM
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626, University of California, Davis, Department of Economics.
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"Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies,"
2004:14, Lund University, Department of Economics, revised 13 Sep 2004.
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"Two are few and four are many: number effects in experimental oligopolies,"
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- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
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- Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
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