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Scale economies, consistent conjectures and teams

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Published
<mark>Journal publication date</mark>12/2012
<mark>Journal</mark>Economics Letters
Issue number3
Volume117
Number of pages3
Pages (from-to)566-568
Publication StatusPublished
<mark>Original language</mark>English

Abstract

This paper models the behavior of team members in a consistent conjectures equilibrium. When subject to scale economies, team members produce more than Nash and when subject to scale diseconomies, they produce less than Nash. Moreover, even when effort levels of team members are perfect substitutes in production, they can be strategic complements in the face of scale economies. Finally, with sufficient scale economies, the complementarity eliminates free-riding and the team optimum is obtained.