Confusopoly: competition and obfuscation in markets

Kenan Kalayci

Experimental Economics, 2016, vol. 19, issue 2, No 3, 299-316

Abstract: Abstract This paper examines the effects of competition in experimental posted-offer markets where sellers can confuse buyers. I report two studies. In one, the sellers offering heterogeneous goods can obfuscate buyers by means of spurious product differentiation. In the other study, sellers offer identical goods and make their prices unnecessarily complex by having multi-part tariffs. I vary the level of competition by having treatments with two and three- sellers in both studies, and having an additional treatment with five-sellers in one study. The results show that average complexity created by a seller is not different for the treatments with two, three and five sellers. In addition, market prices are highest and buyer surplus is lowest when there are two sellers in a market.

Keywords: Experiment; Bounded rationality; Buyer confusion; Price complexity; Product complexity; Oligopoly (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10683-015-9438-z

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