Simultaneous and sequential price competition in heterogeneous duopoly markets:: experimental evidence

We investigate simultaneous and sequential price competition in duoply markets with differentiated products and random matching of symmetric firms. We find that second movers gain from the sequential structure in comparison to simultaneous-move markets whereas first movers do not. As predicted by the theory, there is a significant first-mover disadvantage in the sequential game. Finally, we report the results of control treatments varying the matching scheme and the mode of eliciting choices (strategy method vs. standard sequential play). (C) 2002 Elsevier Science B.V. All rights reserved.