We conducted a laboratory experiment to study the price setting behavior in two-sided markets. We seek to answer two specific research questions: Do participants charge the equilibrium prices that can be derived from a theoretical model? How is the price setting affected by the characteristics...

Two firms engage in price competition to attract buyers located on a network. The value of the good of either firm to any buyer depends on the number of neighbors on the network who adopt the same good. When the size of externalities increases linearly with the number of adoptions, we identify...

We conduct experiments testing the relationship between excess capacity and pricing in repeated Bertrand-Edgeworth duopolies and triopolies. We systematically vary the experimental markets between low excess capacity (suggesting monopoly) and no capacity constraints (suggesting perfect...

One of the hallmarks of competitive interaction is each firm’s desire to differentiate from rivals. Although differentiation may be achieved through product related choices, advertising levels may constitute another key mechanism. In this paper, we examine under what conditions firms will...

This paper studies dynamic price competition over two periods between two firms selling differentiated durable goods to two buyers who are privately informed about their types, but have valuations of the two goods dependent on the other buyer's type. The firms' pricing strategy in period 1 must...

This study constructs a consumer search model in which some consumers search for multiple products, whereas others search for a single product. A price difference arises because of a difference in the price elasticity for each group. We show that a positive demand shock to one of the products...

This paper considers a vertically related industry where an upstream supplier simultaneously negotiates with two downstream retailers endowed with (possibly) asymmetric bargaining powers, over the purchase of an input. Downstream firms have asymmetric capacities and downstream competition has a...

This paper theoretically investigates the pricing and advertising decisions of a monopolist that sells to consumers who, in any given period, may or may not consider the (cognitively costly) decision to buy its product. In the proposed model, consumers can be compelled by advertising to consider...