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Tie-breaking rules and divisibility in experimental duopoly markets

  • Puzzello, Daniela

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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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 67 (2008)
Issue (Month): 1 (July)
Pages: 164-179

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Handle: RePEc:eee:jeborg:v:67:y:2008:i:1:p:164-179
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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