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Quantity Competition, Endogenous Motives and Behavioral Heterogeneity

  • Chirco, Alessandra
  • Colombo, Caterina
  • Scrimitore, Marcella

The paper shows that strategic quantity competition can be characterized by behavioral heterogeneity, once competing firms are allowed in a pre-market stage to optimally choose the behavioral rule they will follow in their strategic choice of quantities. In particular, partitions of the population of identical firms in profit maximizers and relative profit maximizers turn out to be deviation-proof equilibria, both in simultaneous and sequential game structures. Our findings that in a strategic framework heterogeneous behavioral rules are consistent with individual incentives provides a game-theoretic microfoundation of heterogeneity.

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File URL: http://mpra.ub.uni-muenchen.de/24165/1/MPRA_paper_24165.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24165.

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Date of creation: Jul 2010
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Handle: RePEc:pra:mprapa:24165
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  1. Fernando Vega Redondo, 1996. "The evolution of walrasian behavior," Working Papers. Serie AD 1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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  5. Steven D. Sklivas, 1987. "The Strategic Choice of Managerial Incentives," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 452-458, Autumn.
  6. Rosemarie Nagel & Nicolaas J. Vriend, 1997. "An experimental study of adaptive behavior in an oligopolistic market game," Economics Working Papers 230, Department of Economics and Business, Universitat Pompeu Fabra.
  7. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-40, December.
  8. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
  9. repec:ner:tilbur:urn:nbn:nl:ui:12-91663 is not listed on IDEAS
  10. Theo Offerman & Jan Potters & Joep Sonnemans, 2002. "Imitation and Belief Learning in an Oligopoly Experiment," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 973-997.
  11. Thomas Riechmann, 2006. "Mixed motives in a Cournot game," Economics Bulletin, AccessEcon, vol. 4(29), pages 1-8.
  12. Nolan Miller & Amit Pazgal, 2002. "Relative performance as a strategic commitment mechanism," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 51-68.
  13. Miller, Nolan H & Pazgal, Amit I, 2001. "The Equivalence of Price and Quantity Competition with Delegation," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 284-301, Summer.
  14. Kangsik Choi & Yuanzhu Lu, 2009. "A Model Of Endogenous Payoff Motives And Endogenous Timing In A Mixed Duopoly ," Australian Economic Papers, Wiley Blackwell, vol. 48(3), pages 203-223, 09.
  15. Huang, Weihong, 2003. "A naive but optimal route to Walrasian behavior in oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 553-571, December.
  16. Nikolaos Georgantz�s & Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2008. "Strategic delegation in experimental duopolies with endogenous incentive contracts," Working Papers 0809, University of Crete, Department of Economics.
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