Testing neoclassical competitive market theory in the field
AbstractWalrasian tatonnement has been a fundamental assumption in economics ever since Walras' general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in ""double- auction"" markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets--the sports card and collector pin markets--I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.
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Bibliographic InfoPaper provided by The Field Experiments Website in its series Artefactual Field Experiments with number 00082.
Date of creation: 2002
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- Steven D. Levitt & John A. List, 2008.
"Field Experiments in Economics: The Past, The Present, and The Future,"
NBER Working Papers
14356, National Bureau of Economic Research, Inc.
- Levitt, Steven D. & List, John A., 2009. "Field experiments in economics: The past, the present, and the future," European Economic Review, Elsevier, vol. 53(1), pages 1-18, January.
- Steven Levitt & John List, 2009. "Field experiments in economics: The past, the present, and the future," Artefactual Field Experiments 00079, The Field Experiments Website.
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