IDEAS home Printed from https://ideas.repec.org/a/cup/agrerw/v39y2010i02p193-212_00.html

Keep It Down: An Experimental Test of the Truncated k-Double Auction

Author

Listed:
  • Doyon, Maurice
  • Rondeau, Daniel
  • Mbala, Richard

Abstract

The introduction of a centralized institution for trading production rights in quota-regulated agricultural sectors can dramatically improve the flow of information among market participants and increase efficiency. On the other hand, prevailing conditions in these small markets can provide sellers with a market advantage, yielding high quota prices that impose important financial costs on quota holders and limit the entry of new producers into the industry. In this paper, we modify the normal allocation rule of the k-double auction (kDA) to counter thin market conditions and to favor buyers who bid low prices. In laboratory experiments, we test the “truncated” kDA (T-kDA) against a regular kDA for its ability to affect buyer and seller behavior and decrease equilibrium prices, and assess how it impacts efficiency. The results show that the T-kDA significantly lowers the equilibrium price and results in moderate efficiency losses. Most importantly, the T-kDA effectively counters the market power of oligopolists when demand far outstrips supply.

Suggested Citation

  • Doyon, Maurice & Rondeau, Daniel & Mbala, Richard, 2010. "Keep It Down: An Experimental Test of the Truncated k-Double Auction," Agricultural and Resource Economics Review, Cambridge University Press, vol. 39(2), pages 193-212, April.
    • Handle: RePEc:cup:agrerw:v:39:y:2010:i:02:p:193-212_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1068280500007243/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tajana Čop & Mario Njavro, 2022. "Application of Discrete Choice Experiment in Agricultural Risk Management: A Review," Sustainability, MDPI, vol. 14(17), pages 1-17, August.
    2. Messer, Kent D. & Murphy, James J., 2010. "FOREWORD: Special Issue on Experimental Methods in Environmental, Natural Resource, and Agricultural Economics," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), pages 1-4, April.
    3. Predrag Rajsic & Glenn Fox, 2017. "Quota prices as indicators of comparative advantage in supply-managed industries," Agricultural Economics, International Association of Agricultural Economists, vol. 48(2), pages 165-174, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:agrerw:v:39:y:2010:i:02:p:193-212_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/age .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.