Pricing behavior in asymmetric markets with differentiated products
AbstractWe experimentally test Bertrand-Nash equilibria in markets with differentiated products. In contrast to the existing literature, we choose asymmetric market settings in which pure strategy equilibria do not exist. Our results show that Bertrand-Nash equilibria do remarkably well in predicting price distributions and comparative statics. Inaccuracies can be explained by boundedly rational decision-making. Other equilibrium concepts are not able to explain the data.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 27 (2009)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/505551
Differentiated markets Bertrand-Nash equilibrium Experiment Edgeworth price cycles Undercut-proof equilibrium;
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