Spatial Competition with Three Firms: An Experimental Study

Richard Collins and Katerina Sherstyuk

Economic Inquiry, 2000, vol. 38, issue 1, 73-94

Abstract: This article reports the results of an experimental study of the three firm location problem. We compare the subjects' behavior in the experiments with the symmetric mixed strategy Nash equilibrium calculated by Shaked. Overall, the findings are consistent with the equilibrium prediction. However, the subjects' locations were significantly more dispersed than predicted by the theory. Three alternative explanations of this phenomenon--inexperience, approximate equilibrium behavior and risk aversion--are suggested and evaluated for their predictive power. Special attention is paid to risk aversion. Copyright 2000 by Oxford University Press.

Date: 2000
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Working Paper: Spatial Competition with Three Firms: An Experimental Study (1999)
Working Paper: Spatial Competition with Three Firms: An Experimental Study (1998)
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