Testing neoclassical competitive theory in multi-lateral decentralized markets
AbstractWalrasian tatonnement has been a fundamental assumption in economics ever since Walrasian 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 Framed Field Experiments with number 00176.
Date of creation: 2004
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- John A. List, 2004. "Testing Neoclassical Competitive Theory in Multilateral Decentralized Markets," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1131-1156, October.
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