Victorious alliances often fight about the spoils of war. This article presents an experiment on the determinants of whether alliances break up and fight internally after having defeated a joint enemy. First, if peaceful sharing yields an asymmetric rent distribution, this increases the...

We study the merger paradox, a relative of Harsanyi's bargaining paradox, in an experiment. We examine bilateral mergers in experimental Cournot markets with initially three or four firms. Standard Cournot-Nash equilibrium predicts total outputs well. However, merged firms produce significantly...

We analyze the incidence and welfare effects of unit sales tax increases in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of the tax burden to consumers, independent of whether buyers are...

In a Stackelberg framework of capital income taxation it is shown that imposing a minimum tax rate that is lower than all countries' equilibrium tax rates in the unconstrained non-cooperative equilibrium may reduce equilibrium tax rates in all countries. © 2008 Elsevier B.V. All rights reserved.

A lack of sufficient diversification in research strategies has been identified as an important problem for delegated research. We show that this problem can be solved by local competition (such as bribery, lobbying, rent seeking, competition at the patent office) among players who apply the...

This paper shows that vertical fiscal inefficiencies impede federally organized countries in successfully attracting foreign direct investment. Such countries, particularly if characterized by weak institutions, are disadvantaged in the process of bidding for firms and in their ability to commit...

This article studies the explanatory power of intangible factors - such as country stereotypes and consumer perceptions - for the size of foreign direct investment (FDI) flows, controlling for fundamental variables. To operationalize the concept of these intangibles we use the idea of the...

We analyse bargaining over international climate agreements in a setting with incomplete information about abatement costs. Incomplete information is known as one of the key reasons why negotiations may fail more generally, and why efficiency gains cannot be exploited. We ask whether unilateral...

Where product innovation requires several complementary patents, fragmented property rights can limit firms' willingness to invest in R&D. We consider the research intensity in multiple simultaneous R & D contests and how it depends on whether firms already hold relevant patents as well as the...

We study the role of information exchange that may occur in alliances in a contest without noise. Contestants learn their own limits of what they can spend in a contest. They may also form alliances and learn the limits of all players who are within the same alliance. Then they decide...