Dorothea Kübler and Wieland Müller

"Simultaneous and sequential price competition on heterogeneus duopoly markets: experimental evidence," International Journal of Industrial Organization Volume 20, Issue 10, December 2002, pages 1437-60.

JEL codes: C92, D43
Keywords: heterogeneous dupoly, price leadership, simultaneous play, first-mover disadvantage, strategy method, experimental economics

Abstract: We investigate simultaneous and sequential price competition on duopoly markets with differentiated products. In both markets symmetric firms are repeatedly and randomly matched. As in theory we find that average prices in the sequential market are higher than average prices in the simultaneous market implying lower consumer rent in the first market. Furthermore, there is a significant first-mover disadvantage when firms decide sequentially, which is again in line with the game theoretical prediction. However, average prices in both the simultaneous and the sequential moves game differ from equilibrium prices.

Supplementary material:

TrSeqRand.xls - SeqRand.xls - SimFix.xls - SimRand.xls - TrSeqFix.xls - SeqFix.xls