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Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

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  • Puzzello, Daniela

Abstract

This experimental study investigates 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. The main finding is 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.

Suggested Citation

  • Puzzello, Daniela, 2007. "Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets," MPRA Paper 6436, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6436
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    File URL: https://mpra.ub.uni-muenchen.de/6436/1/MPRA_paper_6436.pdf
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    Cited by:

    1. Dijkstra, Peter T., 2014. "Price Leadership and Unequal Market Sharing," Research Report 14013-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. repec:luc:wpaper:16-22 is not listed on IDEAS
    3. Jan Potters & Sigrid Suetens, 2013. "Oligopoly Experiments In The Current Millennium," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 439-460, July.
    4. Shakun Datta Mago & Emmanuel Dechenaux, 2009. "Price leadership and firm size asymmetry: an experimental analysis," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 289-317, September.
    5. Dijkstra, Peter T., 2015. "Price leadership and unequal market sharing: Collusion in experimental markets," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 80-97.
    6. Lugovskyy, Volodymyr & Puzzello, Daniela & Tucker, Steven, 2010. "An experimental investigation of overdissipation in the all pay auction," European Economic Review, Elsevier, vol. 54(8), pages 974-997, November.

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    More about this item

    Keywords

    Collusion; Tie Breaking Rules; Divisibility; Bertrand model;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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    This paper has been announced in the following NEP Reports:

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