Horizontal Product Differentiation in Auctions and Multilateral Negotiations
AbstractWe experimentally compare first-price auctions and multilateral negotiations after introducing horizontal product differentiation into a standard procurement setting. The two institutions yield the buyer the same surplus, a difference from prior findings with homogeneous products that results from differentiation’s influence on the sellers’ pricing behavior. In particular, we find that introducing product differentiation intensifies price competition among the sellers in some treatments, and has no effect in others, which contrasts with the conventional wisdom that product differentiation softens competition.
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Bibliographic InfoPaper provided by Chapman University, Economic Science Institute in its series Working Papers with number 08-03.
Length: 27 pages
Date of creation: 2008
Date of revision:
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