Duersch, Peter ; Eife, Thomas
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Abstract
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.
| Document type: | Working paper |
|---|---|
| Series Name: | Discussion Paper Series / University of Heidelberg, Department of Economics |
| Volume: | 0547 |
| Date Deposited: | 13 Aug 2013 08:26 |
| Date: | July 2013 |
| Number of Pages: | 28 |
| Faculties / Institutes: | The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics |
| DDC-classification: | 330 Economics |
| Uncontrolled Keywords: | Bertrand Duopoly, Inflation, Experiment, Money Illusion |
| Series: | Discussion Paper Series / University of Heidelberg, Department of Economics |
