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Is a “Firm” a Firm? A Stackelberg Experiment
Industrial organization is mainly concerned with the behavior of large firms. Experimental industrial organization therefore faces a problem: How can firms be brought into the laboratory? The main approach relies on framing: Call individuals “firms”! This experimental approach is not in line with mo...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 29-2012) |
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| Main Author: | |
| Format: | Work |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2012
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | Industrial organization is mainly concerned with the behavior of large firms. Experimental industrial organization therefore faces a problem: How can firms be brought into the laboratory? The main approach relies on framing: Call individuals “firms”! This experimental approach is not in line with modern industrial organization, according to which a firm’s market behavior is also determined by its organizational structure. In this paper, a Stackelberg experiment is considered in order to answer the question whether framing individual decision making as organizational decision making or implementing an organizational structure is more effective in generating profit-maximizing behavior. Firms are either represented by individuals or by teams. I find that teams’ quantity choices are more in line with the assumption of profit maximization than individuals’ choices. Compared to individuals, teams appear to be less inequality averse. |
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| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0143 |