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Catalog Competition: Equilibrium Characterization and experimental evidence

Dimitrios Xefteris, Iván Barreda-Tarrazona (), Aurora García-Gallego () and Nikolaos Georgantzís ()

No 2018/08, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: This paper studies a catalog competition game: two competing rms decide at the same time product characteristics and prices in order to maximize pro ts. In the unique symmetric equilibrium of this one-stage Hotelling (1929) game, rms employ mixed strategies which make them produce more often a mainstream product variety than any of the specialized ones and always charge higher prices than their marginal costs (also, prices for mainstream products are found to be lower than prices for specialized products). We experimentally test and con rm the main predictions of the model, and we also compare it to the rst-location-then-pricing original setup.

Keywords: catalog competition; Hotelling; mixed equilibrium; experiment (search for similar items in EconPapers)
JEL-codes: C72 C92 D43 D90 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2018
New Economics Papers: this item is included in nep-com, nep-exp and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2018/08

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