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Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

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  • Puzzello, Daniela

Abstract

We investigate 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. We find 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 6453.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:6453

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Keywords: Collusion; Tie-breaking rules; Divisibility; Bertrand model;

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Cited by:
  1. 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.
  2. Lugovskyy, Volodymyr & Puzzello, Daniela & Tucker, Steven, 2010. "An experimental investigation of overdissipation in the all pay auction," European Economic Review, Elsevier, Elsevier, vol. 54(8), pages 974-997, November.

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