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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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    1. repec:spo:wpmain:info:hdl:2441/53r60a8s3kup1vc9ji1hni539 is not listed on IDEAS
    2. Evens Salies, 2012. "Asymmetric switching costs can improve the predictive power of shy's model," SciencePo Working papers Main hal-01070341, HAL.
    3. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9ji1hni539 is not listed on IDEAS
    4. Jan Potters & Sigrid Suetens, 2013. "Oligopoly Experiments In The Current Millennium," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 439-460, July.

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