Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90881
Authors: 
Güth, Werner
Pull, Kerstin
Stadler, Manfred
Zaby, Alexandra
Year of Publication: 
2014
Series/Report no.: 
University of Tübingen Working Papers in Economics and Finance 68
Abstract: 
We present a model of price leadership on homogeneous product markets where the price leader is selected endogenously. The price leader sets and guarantees a sales price to which followers adjust according to their individual supply functions. The price leader clears the market by serving the residual demand. As price leaders, firms with different marginal costs induce different prices. We compare two mechanisms to determine the price leader, majority voting and competitive bidding. According to the experimental data at least experienced price leaders with lower marginal costs choose higher prices. In the bidding treatment, compensation payments to the price leader crowd in efficiency concerns.
Subjects: 
price leadership
majority voting
bidding
experimental economics
JEL: 
D43
D74
L11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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