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Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

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  • Puzzello, Daniela

Abstract

This experimental study investigates pricing behavior of sellers in duopoly markets with posted prices and market power. The two treatment variables are given by tie breaking rules and divisibility of the price space. The first treatment variable deals with the rule under which demanded units are allocated between sellers in case of a price tie. A change in divisibility is modeled by making the sellers' price space finer or coarser. The main finding is that the incidence of perfect collusion is significantly higher under the sharing tie breaking rule than under the random (coin-toss) one, especially when the price space is less divisible.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6436.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:6436

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Keywords: Collusion; Tie Breaking Rules; Divisibility; Bertrand model;

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Cited by:
  1. Lugovskyy, Volodymyr & Puzzello, Daniela & Tucker, Steven, 2008. "An experimental investigation of overdissipation in the all pay auction," MPRA Paper 8604, University Library of Munich, Germany.
  2. Shakun Datta Mago & Emmanuel Dechenaux, 2009. "Price leadership and firm size asymmetry: an experimental analysis," Experimental Economics, Springer, Springer, vol. 12(3), pages 289-317, September.

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