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Internal conflict, market uniformity, and transparency in price competition between teams

Author

Listed:
  • Michael Kurschilgen

    () (Max Planck Institute for Research on Collective Goods)

  • Alexander Morell

    () (Max Planck Institute for Research on Collective Goods)

  • Ori Weisel

    (Coller School of Management, Tel Aviv University)

Abstract

The way profits are divided within successful teams imposes different degrees of internal conflict. We experimentally examine how the level of internal conflict, and whether such conflict is transparent to other teams, affects teams' ability to compete vis-à-vis each other, and, consequently, market outcomes. Participants took part in a repeated Bertrand duopoly game between three-player teams which had either the same or different level of internal conflict (uniform vs. mixed). Profit division was either private-pay (high conflict; each member received her own asking price) or equal-pay (low conflict; profits were divided equally). We find that internal conflict leads to (tacit) coordination on high prices in uniform private-pay duopolies, but places private-pay teams at a competitive disadvantage in mixed duopolies. Competition is softened by transparency in uniform markets, but intensified in mixed markets. We propose an explanation of the results and discuss implications for managers and policy makers.

Suggested Citation

  • Michael Kurschilgen & Alexander Morell & Ori Weisel, 2016. "Internal conflict, market uniformity, and transparency in price competition between teams," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_18, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2016_18
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    References listed on IDEAS

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    More about this item

    Keywords

    Organizations; Conflict; Sharing Rules; Competition; Heterogeneity; Transparency; Experiment;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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