Bertrand competition under decreasing returns involves a wide interval of pure strategy equilibrium prices. We first present results of experiments in which two, three and four identical firms repeatedly interact in this environment. Less collusion with more firms leads to lower average prices....

This paper analyses the effects of a downstream merger in a differentiated duopoly under price competition and plant-specific unions. We show, in contrast with the preceding literature, that the standard welfare results may be reversed: a downstream merger may increase consumer surplus and...

This paper analyses the effects of a downstream merger in a differentiated duopoly under price competition and firm-specific unions. In contrast with the acquired wisdom, we show that a downstream merger may increase overall welfare when products are sufficienly substitutes and unions are...

Inspired by the empirical work of Holmes (2011), which suggests the economic importance of distribution costs in the firm's optimal location decision, this paper introduces endogenous distribution costs in the model of Hotelling (1929). The proposed model shows an interesting trade-off between...

We investigate empirically how sellers react to changes in the population of their consumers, identifying the effects of demand composition and demand size with limited information on costs. We show how pharmacists in Italy selectively increase the price of some products when they observe in...

In this paper we investigate whether markets with heterogeneous network externalities can belocked-in by old technologies even if superior technologies are available. Heterogeneous networkexternalities are present when some consumers care more about the size of the market share of agood than...

In this paper we investigate whether markets with heterogeneous network externalities can be locked-in by old technologies even if superior technologies are available. Heterogeneous network externalities are present when some consumers care more about the size of the market share of a good than...

We study collusive behaviour in experimental duopolies that compete in prices under dynamic demand conditions. In one treatment the demand grows at a constant rate. In the other treatment the demand declines at another constant rate. The rates are chosen so that the evolution of the demand in...