Quantity Precommitment with Price Competition versus Quantity Precommitment with Market Clearing Prices in the Laboratory
AbstractThe 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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Bibliographic InfoPaper provided by McMaster University in its series Department of Economics Working Papers with number 2009-04.
Length: 13 pages
Date of creation: Jun 2009
Date of revision:
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Duopoly; Laboratory experiment; Quantity precommitment; Posted prices; Price competition; Market-clearing prices; Experience;
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-COM-2009-07-03 (Industrial Competition)
- NEP-EXP-2009-07-03 (Experimental Economics)
- NEP-MIC-2009-07-03 (Microeconomics)
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