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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"Strategic delegation in experimental markets,"
Other publications TiSEM
64e031eb-d6bb-4b12-8b1e-1, Tilburg University, School of Economics and Management.
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- Steffen Huck & Wieland Müller & Hans-Theo Norman, 2000. "Strategic Delegation in Experimental Markets," CESifo Working Paper Series 290, CESifo Group Munich.
- Burkhard C. Schipper & Philippe Raab, 2006.
"Cournot Competition between Teams: An Experimental Study,"
626, University of California, Davis, Department of Economics.
- 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.
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"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).
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- Ola Andersson & Erik Wengström, 2007.
"Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies,"
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Wiley Blackwell, vol. 109(2), pages 321-339, 06.
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- Bornstein, Gary & Kugler, Tamar & Budescu, David V. & Selten, Reinhard, 2008.
"Repeated price competition between individuals and between teams,"
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Elsevier, vol. 66(3-4), pages 808-821, June.
- Gary Bornstein & David V. Budescu & Tamar Kugler & Reinhard Selten, 2002. "Repeated Price Competition Between Individuals and Between Teams," Discussion Paper Series dp303, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- 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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