Advance Production Duopolies and Posted Prices or Market-Clearing Prices
AbstractThe paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Duopolies in which producers with complete information about market demand make advance-production output decisions and sell their output at a clearing price (Cournot markets) are contrasted with comparable duopolies who post prices for sale through an efficient rationing mechanism (Kreps-Scheinkman or KS markets). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in Cournot markets. With experience, the differences disappear. If trading sessions last sufficiently long, it is likely that differences will disappear with inexperienced participants.
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Bibliographic InfoPaper provided by McMaster University in its series Department of Economics Working Papers with number 2002-07.
Length: 28 pages
Date of creation: Jul 2002
Date of revision:
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Other versions of this item:
- David Goodwin & Stuart Mestelman, 2003. "Advance Production Duopolies and Posted Prices or Market-Clearing Prices," McMaster Experimental Economics Laboratory Publications 2003-04, McMaster University.
- NEP-ALL-2003-03-10 (All new papers)
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