Munich Personal RePEc Archive

Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

Puzzello, Daniela (2006): Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets. Published in: Journal of Economic Behavior and Organization , Vol. 67, (2008): pp. 164-179.

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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.

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