Thursday, September 22, 2011
Posted by D. Daniel Sokol
Werner Guth (Max Planck Institute of Economics), Kerstin Pull (University of Tubingen, Department of Economics and Business Administration) & Manfred Stadler (University of Tubingen, Department of Economics and Business Administration) explore Intrafirm conflicts and interfirm competition.
ABSTRACT: We study strategic interfirm competition allowing for internal conflicts in each seller firm. Intrafirm conflicts are captured by a multi-agent framework with principals implementing a revenue sharing scheme. For a given number of agents, interfirm competition leads to a higher revenue share for the agents, higher equilibrium effort levels and higher agent utility, but lower profits for the firms. The winners from antitrust policy are thus not only the consumers but also the agents employed by the competing firms.