In the economic literature on market competition, firms are often modelled as single decision makers and the internal organization of the firm is neglected (unitary player assumption). However, as the literature on strategic delegation suggests, one can not generally expect that the behavior of...

We analyze a symmetric n-firm Cournot oligopoly with a heterogeneous population of optimizers and imitators. Imitators mimic the output decision of the most successful firms of the previous round a la Vega-Redondo (1997). Optimizers play a myopic best response to the opponents' previous output....

This paper presents a simple boundedly rational model of a firm and consumer behaviour. We formulate an entry game, where every firm decides on investing in R&D for inventing a new product that will appeal to certain group of consumers. The success depends on the amount of funds available for...

Cooperation in prisoner's dilemma games can usually be sustained only if the game has an infinite horizon. We analyze to what extent the theoretically crucial distinction of finite vs. infinite-horizon games is reflected in the outcomes of a prisoner's dilemma experiment. We compare three...

We examine the behaviors of one state-owned welfare-maximizing firm and one labor-managed income-per-worker-maximizing firm in a two-stage mixed market model with capacity investment as a strategic instrument. In the first stage, each firm independently decides whether or not to install...

Transparency in teams can facilitate cooperation. We study contribution decisions by agents when previous decisions can be observed. We find that an information chain, in which each agent directly observes only the decision of her immediate predecessor, is at least as effective as a...

Transparency in teams can induce cooperation. We study contribution decisions by agents when previous decisions can be observed. We find that an information chain, in which each agent directly observes only the decision of her immediate predecessor, is at least as effective as a...

This paper considers a two-stage quantity-setting duopoly model. The paper classifies demand functions into the following four cases in terms of the goods relevance and strategic relevance between both firms: ‘substitute goods and strategic substitutes’, ‘substitute goods and strategic...

This paper examines the idea that if an incumbent firm deviates from short-term profit maximization behavior and deters the entry of a potential entrant at the expense of higher profit, then its own mid-/long-term profit maximization is achieved. The paper confirms the importance of the...

We consider an observer who makes a finite number of observations of an industry producing a homogeneous good, where each observation consists of the market price and firm specific production quantities.  We develop a revealed preference test (in the form of a linear program) for the hypothesis...