Price Competition in an Inflationary Environment

We study how inflation and deflation affect firms' ability to cooperate in an experimental Bertrand duopoly with differentiated products. We find that there is significantly less cooperation in the treatments with inflation and deflation compared to the no-inflation treatments. The difficulties to cooperate affect prices and welfare: Depending on the market structure, inflation and deflation lead to significantly lower (real) prices and higher welfare.

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Year of publication:	2013-08-13
Authors:	Duersch, Peter ; Eife, Thomas
Institutions:	Alfred-Weber-Institut für Wirtschaftswissenschaften, Fakultät für Wirtschafts- und Sozialwissenschaften
Subject:	Bertrand Duopoly \| Inflation \| Experiment \| Money Illusion

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Extent:	text/html application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Notes:	This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html Number 0547
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010895519