Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107446
Authors: 
Erlei, Mathias
Springmann, Jens-Peter
Year of Publication: 
2006
Series/Report no.: 
TUC Working Papers in Economics 05
Abstract: 
This paper provides experimental evidence on exit behavior of asymmetrically sized firms in a duopoly with declining demand. We conduct three treatments: (a) The basic model with indivisible real capital. The structure of this treatment represents the main findings of Ghemawat and Nalebuff (1985); (b) an extension of the basic model by introducing a bankruptcy constraint; (c) here we allow for divisible real capital (Ghemawat and Nalebuff (1990)). In all three treatments we find behavior that is, by and large, in line with subgame perfect Nash Equilibrium. However, there is a problem of multiplicity of equilibria in (b) and we find an anchor effect as well as learning effects in (c).
Subjects: 
Exit
duopoly
declining market
experimental economics
JEL: 
D43
L11
C92
Document Type: 
Working Paper

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