Experimental duopolies under price guarantees

Enrique Fatas (), Nikolaos Georgantz, Juan A. Mañez and Gerardo Sabater

Applied Economics, 2013, vol. 45, issue 1, 15-35

Abstract: In a symmetric differentiated experimental duopoly we test the ability of Price Guarantees (PGs) to raise prices above the competitive levels. Different types of PGs (‘aggressive’ and ‘soft’ price-beating and price-matching) are implemented either as an exogenously imposed market rule or as a business strategy. Our results show that PGs may lead close to the collusive outcome, depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the ‘aggressive’ price-beating type.

Date: 2013
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Working Paper: EXPERIMENTAL DUOPOLIES UNDER PRICE GUARANTEES (2011)
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DOI: 10.1080/00036846.2011.568398

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