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First Mover Advantage in Sequential Bertrand Markets: an Experimental Approach

by Fitz, Perry

Abstract

Literature and applied experimental evidence has established the consensus that firms competing with price competition in sequential markets have a second mover advantage. A high proportion of literature assumes firms have symmetric costs, while in real markets firms tend to have asymmetrical costs. In this paper, I use current literature to define various profit assumptions that yields a theoretical first mover advantage for a low-cost firm in a differentiated-product Bertrand-duopoly. I report on the findings of an experimental 30 round sequential game, where firms have varying levels of cost. The results show that a low-cost firm will not necessarily always have a first mover advantage against a high-cost competitor.

Note

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Includes bibliographical references.

Administrative Notes

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Copyright
Copyright restrictions apply.
Publisher
Colorado College Tutt Library
PID
coccc:27431
Digital Origin
born digital
Extent
31 pages : illustrations
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Rask, Kevin Fullerton, Rich
Department/Program
Economics and Business
Degree Name
Bachelor of Arts
Degree Type
bachelor
Degree Grantor
Colorado College Tutt Library
Date Issued
2017-05