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Quantity Competition, Endogenous Motives and Behavioral Heterogeneity

Author

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

Abstract

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.

Suggested Citation

  • Chirco, Alessandra & Colombo, Caterina & Scrimitore, Marcella, 2010. "Quantity Competition, Endogenous Motives and Behavioral Heterogeneity," MPRA Paper 24165, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:24165
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    References listed on IDEAS

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    1. 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.
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    6. Nikolaos Georgantzís & 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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    13. 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, September.
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    Citations

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    Cited by:

    1. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    2. repec:kea:keappr:ker-20190701-35-2-03 is not listed on IDEAS
    3. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "The Timing Of Environmental Tax Policy With A Consumer-Friendly Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(1), pages 25-43, June.
    4. Kopel, Michael & Lamantia, Fabio & Szidarovszky, Ferenc, 2014. "Evolutionary competition in a mixed market with socially concerned firms," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 394-409.
    5. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo Group Munich.
    6. repec:eee:dyncon:v:91:y:2018:i:c:p:71-83 is not listed on IDEAS
    7. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    8. repec:eee:quaeco:v:67:y:2018:i:c:p:1-7 is not listed on IDEAS
    9. R. Cellini & L. Lambertini & G. I. P. Ottaviano, 2015. "To Know or Not To Know: Strategic Inattention and Endogenous Market Structure," Working Papers wp987, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. Arturo García & Mariel Leal & Sang-Ho Lee, 2019. "Endogenous Timing with a Socially Responsible Firm," Korean Economic Review, Korean Economic Association, vol. 35, pages 345-370.
    11. Domenico De Giovanni & Fabio Lamantia, 2016. "Control delegation, information and beliefs in evolutionary oligopolies," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1089-1116, December.

    More about this item

    Keywords

    Behavioral Heterogeneity; Endogenous Motives; Relative Performance; Multistage Games; Quantity Competition.;

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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