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Quantity Precommitment with Price Competition versus Quantity Precommitment with Market Clearing Prices in the Laboratory

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Author Info

  • David Goodwin
  • Stuart Mestelman

Abstract

The paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Cournot (C) duopolies (quantity precommitment and a price determined to clear the market) are contrasted with Kreps-Scheinkman (KS) duopolies (quantity precommitment and posted prices). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in C markets. With experience, the differences disappear.

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File URL: http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2009-04.pdf
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Bibliographic Info

Paper provided by McMaster University in its series Department of Economics Working Papers with number 2009-04.

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Length: 13 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:mcm:deptwp:2009-04

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Related research

Keywords: Duopoly; Laboratory experiment; Quantity precommitment; Posted prices; Price competition; Market-clearing prices; Experience;

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