Some of those markets are actually quite competitive with outputs close to the Walrasian outcome. We study a model of competition among polling stations where polling stations have to invest in counting precision to attract voters. Unsurprisingly, we find that competition enhances precision when compared to a monopoly. The somewhat surprising part of our result is that the optimal number of polling stations is two. In this experiment, we analyze strategic delegation in a Cournot duopoly.
Owners can choose among two different contracts which determine their managers' salaries.
One contract simply gives managers incentives to maximize firm profits, while the second contract gives an additional sales bonus. Although theory predicts the second contract to be chosen, it is only rarely chosen in the experimental markets. This behavior is rational given that managers do not play according to the subgame perfect equilibrium prediction when asymmetric contracts are given. Thus, delegation models' prediction that output and consumer rents are greater under the separation of ownership and management should be taken with care. If some firms cooperate in such markets, they must decide how to allocate effort on each of their products and whether to reduce the number of their products in the competition.