Pricing behavior in asymmetric markets with differentiated products

Ronald Peeters () and Martin Strobel

International Journal of Industrial Organization, 2009, vol. 27, issue 1, pages 24-32

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.

Keywords: Differentiated; markets; Bertrand-Nash; equilibrium; Experiment; Edgeworth; price; cycles; Undercut-proof; equilibrium (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:indorg:v:27:y:2009:i:1:p:24-32

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