Repeated price competition between individuals and between teams

Gary Bornstein, Tamar Kugler, David V. Budescu, Reinhard Selten

Research output: Contribution to journalArticle

21 Scopus citations

Abstract

We conducted an experimental study of price competition in a duopolistic market. The market was operationalized as a repeated game between two "teams" with one, two, or three players in each team. We found that asking (and winning) prices were significantly higher in competition between individuals than in competition between two- or three-person teams. There were no general effects of team size, but prices increased with time when each team member was paid his or her own asking price and decreased when the team's profits were divided equally. This result is consistent with a simple model of individual learning.

Original languageEnglish (US)
Pages (from-to)808-821
Number of pages14
JournalJournal of Economic Behavior and Organization
Volume66
Issue number3-4
DOIs
StatePublished - Jun 1 2008

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Keywords

  • Bertrand model
  • Experiments
  • Group behavior
  • Price competition
  • Tacit collusion

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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