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http://dspace.mediu.edu.my:8181/xmlui/handle/10261/1865| Title: | Price competition under cost uncertainty: A laboratory analysis |
| Keywords: | Laboratory experiments Industrial organisation Oligopoly Price competition |
| Description: | Trabajo publicado como artículo en Economic Inquiry 43(3): 636-648 (2005).-- http://dx.doi.org/10.1093/ei/cbi044 We study the relation between the number of firms and price-cost margins under price competition with uncertainty about competitors' costs. We present results of an experiment in which two, three and four identical firms repeatedly interact in this environment. In line with the theoretical prediction, market prices decrease with the number of firms, but on average stay above marginal costs. Pricing is less aggressive in duopolies than in triopolies and tetrapolies. However, independently from the number of firms, pricing is more aggressive than in the theoretical equilibrium. Both the absolute and the relative surpluses increase with the number of firms. Total surplus is close to the equilibrium level, since enhanced consumer surplus through lower prices is counteracted by occasional displacements of the most efficient firm in production. Financial support by the European Union through the TMR research network ENDEAR (FMRX-CT98-0238), the Spanish Ministerio de Educación y Cultura (PB98-0465), and the University of Nottingham is gratefully acknowledged. |
| URI: | http://dspace.mediu.edu.my:8181/xmlui/handle/10261/1865 |
| Other Identifiers: | http://hdl.handle.net/10261/1865 |
| Appears in Collections: | Digital Csic |
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