Simultaneous and sequential price competition in heterogeneous duopoly markets: experimental evidence

Kübler, Dorothea; Müller, Wieland

doi:10.1016/s0167-7187(02)00033-4

Cited by 41 publications

(29 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The cluster option does not a¤ect the estimated coe¢cients but estimates the standard errors using robust variance matrix calculations that relax the assumption of independence of errors within each cluster. 16 We already saw in Table 1 that leaders tended to underproduce relative to their equilibrium quantities. Since the coe¢cients°1 and°2 are signi…cant, it follows from regressions L2 and L3 that 1 5 This restriction was …rst proposed by Suits (1984).…”

Section: Leaders' Behaviormentioning

confidence: 87%

See 1 more Smart Citation

Noisy leadership: An experimental approach

2002

Self Cite

View full text Add to dashboard Cite

We examine the strategic behavior of leaders and followers in sequential duopoly experiments in which followers either perfectly observe the leaders' actions or else observe nothing. Our experiments show that consistent with the theory, leaders enjoy a greater …rst-mover advantage when followers observe their actions with higher probability. However, the results also show that (i) leaders do not fully exploit their …rst-mover advantage, (ii) when informed, followers tend to overreact slightly (i.e., choose quantities above their best-response to the leaders' quantities), and (iii) when uninformed, followers try to predict leaders' quantities and react optimally.This suggests that followers view the symmetric Cournot outcome as "fair" and whenever they observe leaders who are trying to exploit their …rst-mover advantage, they "punish" them by overreacting. Such punishments in turn induce leaders to behave more softly than the theory predicts.

show abstract

Section: Leaders' Behaviormentioning

confidence: 87%

“…Kübler and Müller (2000) consider a sequential di¤erentiated products duopoly markets with price competition. Unlike with quantity competition, their setting features a second-mover advantage.…”

Section: Now …X An Equilibrium Outcome (B Qmentioning

confidence: 99%

Noisy leadership: An experimental approach

2002

Self Cite

View full text Add to dashboard Cite

show abstract

“…al 2001(Huck et. al , 2002 or price competition (Kübler and Müller, 2002) use a discretized strategy space with a coarse grid. However, Brown Kruse (1991) and Puzzello (2007) document that allowing sellers to price in fixed and discrete increments increases the possibility of collusive behavior.…”

Section: Experimental Design and Proceduresmentioning

confidence: 99%

“…261) concede that "endogenous price leadership might be more likely to be observed in a laboratory than endogenous Stackelberg leadership, as sequential decisions may increase the payoffs of both sellers when their actions are prices" (see also Gal-or, 1985, Dowrick, 1985, Boyer and Moreaux, 1987. Kübler and Müller (2002) conduct the only experimental study that analyzes a leader-follower in a price-setting duopoly game. They compare subjects' earnings in an exogenously specified leader-follower game to earnings in a simultaneous moves game.…”

Section: Introductionmentioning

confidence: 99%

Price leadership and firm size asymmetry: an experimental analysis

Mago

Dechenaux

2009

Exp Econ

View full text Add to dashboard Cite

We use laboratory experiments to examine the effect of firm size asymmetry on price leadership in a capacity constrained duopoly. The unique subgame perfect equilibrium of our duopoly game predicts that the large firm is the price leader. In the experiment, although price leadership by the large firm is frequently observed, behavior deviates significantly from the model's prediction. Both small and large firms display a strong tendency to wait to announce their price. Consequently, simultaneous price setting is frequent. Finally, we observe higher prices when price setting is sequential rather than simultaneous and when firm size asymmetry is high.J.E.L. codes: L11, L13, C91

show abstract

“…3 For models of duopolistic price leadership, see, e.g., Deneckere et al (1992) and Furth and Kovenock (1993), and for an experimental test, see, e.g., Kuebler and Mueller (2002).…”

mentioning

confidence: 99%

Endogenous price leadership – A theoretical and experimental analysis

Güth¹,

Pull

Stadler

et al. 2014

Journal of Economic Behavior & Organization

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe present a model of price leadership on homogeneous product markets where the price leader is selected endogenously. The price leader sets and guarantees a sales price to which followers can adjust according to their individual supply functions.The price leader then clears the market by serving the residual demand. Firms with different marginal costs would induce different prices if they were price leaders.Somewhat counter-intuitively, lower marginal costs of the leader imply higher prices.We compare two mechanisms to determine the price leader in a between-subjects design, majority voting and competitive bidding. The experimental data of later rounds support our theoretical finding that experienced price leaders with lower marginal costs choose higher prices. In the majority voting treatment, participants with higher marginal costs more often establish the lowest cost competitor as price leader in order to induce a higher sales price.

show abstract

Simultaneous and sequential price competition in heterogeneous duopoly markets: experimental evidence

Cited by 41 publications

References 25 publications

Noisy leadership: An experimental approach

Noisy leadership: An experimental approach

Price leadership and firm size asymmetry: an experimental analysis

Endogenous price leadership – A theoretical and experimental analysis

Contact Info

Product

Resources

About