Do Market Institutions Adapt Efficiently to Transaction Costs?
AbstractWe study an experimental market with an endogenous institution. In particular, the information and matching structure of the market is determined by the decisions of the individual traders. We examine the effects of the imposition of exogenous transaction (communication) costs. We find that the institution adapts in the predicted direction but it does not do so in a fully efficient manner. Traders incur avoidable transactions costs, and the market outcome does not fully exhaust the possible gains from trade.
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Bibliographic InfoPaper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0006.
Date of creation: Aug 2000
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Web page: http://www.univie.ac.at/vwl
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-10-11 (All new papers)
- NEP-IND-2000-10-11 (Industrial Organization)
- NEP-REG-2000-10-11 (Regulation)
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