Submission 16
The three body problem: Market instability when activities can be chosen
PS2-G10-01
Presented by: Javier Rodero Cosano
We develop an experiment where three participants (firms) can choose between two activities: price competition and seek over the profits generated by that price competition. Two treatments are considered: one on which taxes on profits are LOW and one on which those are HIGH, that is we manipulate the relative profitability of activities. The main result is that markets become very competitive, specially with LOW taxes.