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

Michael Kurschilgen, Alexander Morell () and Ori Weisel ()
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Alexander Morell: Max Planck Institute for Research on Collective Goods

No 2016_18, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

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.

Keywords: Organizations; Conflict; Sharing Rules; Competition; Heterogeneity; Transparency; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D43 L22 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-cdm and nep-com
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Related works:
Journal Article: Internal conflict, market uniformity, and transparency in price competition between teams (2017)
Working Paper: Internal conflict, market uniformity, and transparency in price competition between teams (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2016_18

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