Price Competition in an Inflationary Environment

Peter Duersch and Thomas Eife ()
Authors registered in the RePEc Author Service: Peter Dürsch

No 547, Working Papers from University of Heidelberg, Department of Economics

Abstract: We study how inflation and deflation affect firms' ability to cooperate in an experimental Bertrand duopoly with differentiated products. We find that there is significantly less cooperation in the treatments with inflation and deflation compared to the no-inflation treatments. The difficulties to cooperate affect prices and welfare: Depending on the market structure, inflation and deflation lead to significantly lower (real) prices and higher welfare.

Keywords: Bertrand Duopoly; Inflation; Experiment; Money Illusion (search for similar items in EconPapers)
Date: 2013-08-13
New Economics Papers: this item is included in nep-bec, nep-com, nep-exp and nep-mac
Note: This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Price competition in an inflationary environment (2019)
Working Paper: Price Competition in an Inflationary Environment (2014)
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