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  Internal conflict, market uniformity, and transparency in price competition between teams

Kurschilgen, M., Morell, A., & Weisel, O. (2016). Internal conflict, market uniformity, and transparency in price competition between teams.

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Item Permalink: http://hdl.handle.net/11858/00-001M-0000-002C-09BB-2 Version Permalink: http://hdl.handle.net/11858/00-001M-0000-002C-EC79-B
Genre: Paper

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 Creators:
Kurschilgen, Michael1, Author              
Morell, Alexander1, Author              
Weisel, Ori, Author
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Organizations, Conflict, Sharing Rules, Competition, Heterogeneity, Transparency, Experiment
 JEL: D43 - Oligopoly and Other Forms of Market Imperfection
 JEL: L22 - Firm Organization and Market Structure
 JEL: C92 - Laboratory, Group Behavior
 Abstract: The way profits are divided within successful teams imposes different degrees of internal conflict. We experimentally examine how the level of internal conflict, and whether such conflict is transparent to other teams, affects teams' ability to compete vis-à-vis each other, and, consequently, market outcomes. Participants took part in a repeated Bertrand duopoly game between three-player teams which had either the same or different level of internal conflict (uniform vs. mixed). Profit division was either private-pay (high conflict; each member received her own asking price) or equal-pay (low conflict; profits were divided equally). We find that internal conflict leads to (tacit) coordination on high prices in uniform private-pay duopolies, but places private-pay teams at a competitive disadvantage in mixed duopolies. Competition is softened by transparency in uniform markets, but intensified in mixed markets. We propose an explanation of the results and discuss implications for managers and policy makers.

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 Dates: 2016
 Publication Status: Published online
 Pages: 28
 Publishing info: Bonn : Max Planck Institute for Research on Collective Goods
 Table of Contents: -
 Rev. Type: -
 Identifiers: Other: 2016/18
 Degree: -

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