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Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

Daniela Puzzello ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate pricing behavior of sellers in duopoly markets with posted prices and market power. The two treatment variables are given by tie-breaking rules and divisibility of the price space. The first treatment variable deals with the rule under which demanded units are allocated between sellers in case of a price tie. A change in divisibility is modeled by making the sellers’ price space finer or coarser. We find that the incidence of perfect collusion is significantly higher under the sharing tie-breaking rule than under the random (coin-toss) one, especially when the price space is less divisible.

Keywords: Collusion; Tie-breaking rules; Divisibility; Bertrand model (search for similar items in EconPapers)
JEL-codes: C9 L1 (search for similar items in EconPapers)
Date: 2006
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https://mpra.ub.uni-muenchen.de/6453/1/MPRA_paper_6453.pdf original version (application/pdf)

Related works:
Journal Article: Tie-breaking rules and divisibility in experimental duopoly markets (2008) Downloads
Working Paper: Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets (2007) Downloads
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