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Pricing behavior in asymmetric markets with differentiated products

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  • Peeters, Ronald
  • Strobel, Martin

Abstract

We 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.

Suggested Citation

  • Peeters, Ronald & Strobel, Martin, 2009. "Pricing behavior in asymmetric markets with differentiated products," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 24-32, January.
  • Handle: RePEc:eee:indorg:v:27:y:2009:i:1:p:24-32
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    References listed on IDEAS

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    7. Shilony, Yuval, 1977. "Mixed pricing in oligopoly," Journal of Economic Theory, Elsevier, vol. 14(2), pages 373-388, April.
    8. Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
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    Cited by:

    1. Evens Salies, 2012. "Asymmetric switching costs can improve the predictive power of shy's model," Working Papers hal-01070341, HAL.

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