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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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File URL: http://mpra.ub.uni-muenchen.de/6453/1/MPRA_paper_6453.pdf
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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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