Competition within firms

Bruttel, Lisa; Schudy, Simeon

Competition within firms

Files

TWI_RPS_062_Bruttel_Schudy_2010_11.pdf(711.94 KB)

Date

2010

Authors

Bruttel, Lisa

Schudy, Simeon

Series

Research paper series / Thurgauer Wirtschaftsinstitut; 62

Publication type

Working Paper/Technical Report

Abstract

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.

Subject (DDC)

330 Economics

Keywords

Cournot Competition,Subsidiary,Subcompany,Experiment

Cite This

ISO 690

BRUTTEL, Lisa, Simeon SCHUDY, 2010. Competition within firms

BibTex

@techreport{Bruttel2010Compe-12168,
  year={2010},
  series={Research paper series / Thurgauer Wirtschaftsinstitut},
  title={Competition within firms},
  number={62},
  author={Bruttel, Lisa and Schudy, Simeon}
}

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Bibliography of Konstanz

Yes