An experiment on spatial competition with endogenous pricing
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Other documents of the author: Barreda-Tarrazona, Iván; García-Gallego, Aurora; Georgantzis, Nikolaos; Andaluz Funcia, Joaquín; Gil Sanz, Agustín
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Show full item recordcomunitat-uji-handle:10234/9
comunitat-uji-handle2:10234/8643
comunitat-uji-handle3:10234/8644
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INVESTIGACIONSee full text
http://dx.doi.org/10.1016/j.ijindorg.2010.02.001 |
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Title
An experiment on spatial competition with endogenous pricingAuthor (s)
Date
2011Publisher
ElsevierISSN
1677187Bibliographic citation
International Journal of Industrial Organization, 29, 1, p. 74-83Type
info:eu-repo/semantics/articlePublisher version
http://www.sciencedirect.com/science/article/pii/S0167718710000196Version
info:eu-repo/semantics/submittedVersionSubject
Abstract
Hotelling's (1929) principle of minimum differentiation and the alternative prediction that firms will maximally differentiate from their rivals in order to relax price competition have not been explicitly tested so ... [+]
Hotelling's (1929) principle of minimum differentiation and the alternative prediction that firms will maximally differentiate from their rivals in order to relax price competition have not been explicitly tested so far. We report results from experimental spatial duopolies designed to address this issue. The levels of product differentiation observed are systematically lower than predicted in equilibrium under risk neutrality and compatible with risk aversion. The observed prices are consistent with collusion attempts. Our main findings are robust to variations in three experimental conditions: automated vs. human market sharing rule for ties, individual vs. collective decision making, and even vs. odd number of locations. © 2010 Elsevier B.V. All rights reserved. [-]
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