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.
|Date of creation:||2010|
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- Pedro Rey-Biel, 2008.
"Inequity Aversion and Team Incentives,"
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- Gary Bornstein & David V. Budescu & Tamar Kugler & Reinhard Selten, 2002.
"Repeated Price Competition Between Individuals and Between Teams,"
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dp303, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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"Strategic delegation in experimental markets,"
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2000,39, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
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- Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
- Andersson, Ola & Wengström, Erik, 2004.
"Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies,"
2004:14, Lund University, Department of Economics, revised 13 Sep 2004.
- Ola Andersson & Erik Wengström, 2007. "Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(2), pages 321-339, 06.
- 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.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004.
"Two are few and four are many: number effects in experimental oligopolies,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 53(4), pages 435-446, April.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001. "Two are Few and Four are Many: Number Effects in Experimental Oligopolies," Bonn Econ Discussion Papers bgse12_2001, University of Bonn, Germany.
- Gary Bornstein & Uri Gneezy, 2002. "Price Competition Between Teams," Experimental Economics, Springer;Economic Science Association, vol. 5(1), pages 29-38, June.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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