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Marshallian vs. Walrasian Stability in an Experimental Market

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Author Info
Plott, Charles R
George, Glen
Abstract

Twelve markets were studied. All markets had downward sloping supply functions created by Marshallian-type external economies in which the costs of individual firms increase with their own volume but decrease with the market volume of all other firms. The conditions were such that the model dp/dt = f (excess demand), typically called the Walrasian theory of dynamics, gives predictions about the dynamics of market behavior opposite of the model dq/dt = "phi" (demand price minus supply price), which is typically called the Marshallian theory. The market organizations studied were double auction, sealed bid/offer and (secant) tatonnement. In all cases the Marshallian theory of dynamics was the better model of market behavior. Copyright 1992 by Royal Economic Society.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 102 (1992)
Issue (Month): 412 (May)
Pages: 437-60
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Handle: RePEc:ecj:econjl:v:102:y:1992:i:412:p:437-60

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  1. Bossaerts, Peter & Kleiman, Daniel & Plott, Charles, 1998. "Price Discovery in Financial Markets: The Case of the CAPM," Working Papers 1032, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  2. C. Mónica Capra & Tomomi Tanaka & Colin Camerer & Lauren Munyan & Veronica Sovero & Lisa Wang & Charles Noussair, 2005. "The Impact of Simple Institutions in Experimental Economies with Poverty Traps," Emory Economics 0508, Department of Economics, Emory University (Atlanta). [Downloadable!]
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  3. GianCarlo Moschini & Luisa Menapace & Daniel Pick, 2008. "Geographical Indications and the Competitive Provision of Quality in Agricultural Markets," Center for Agricultural and Rural Development (CARD) Publications 08-wp458, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  4. Hirota, Masayoshi, 2002. "On the Probability of the Competitive Equilibrium Being Globally Stable: The C.E.S. Example," Working Papers 1129, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  5. Brewer, Paul J. & Huang, Maria & Nelson, Brad & Plott, Charles R., 1999. "On the Behavioral Foundations of the Law of Supply and Demand: Human Rationality vs. Randomness," Working Papers 1079, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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