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Laboratory Behavior in Spot and Forward Auction Markets

  • Owen Phillips
  • Dale Menkhaus
  • Joseph Krogmeier
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    Auctions that require advance production increase seller costs because inventories must be held. This cost does not exist in production-to-demand markets for which production follows trading, and sales exactly match quantities produced. Data from laboratory computerized double auction markets show that advance-production prices are significantly higher and quantities traded are significantly lower than they are in production-to-demand auctions. Price convergence patterns show advance-production sellers moving toward 9% higher prices and 22% greater earnings. Copyright Kluwer Academic Publishers 2001

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    Article provided by Springer in its journal Experimental Economics.

    Volume (Year): 4 (2001)
    Issue (Month): 3 (December)
    Pages: 243-256

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    Handle: RePEc:kap:expeco:v:4:y:2001:i:3:p:243-256
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    1. Mestelman, Stuart & Welland, Douglas, 1988. "Advance Production in Experimental Markets," Review of Economic Studies, Wiley Blackwell, vol. 55(4), pages 641-54, October.
    2. Mestelman, Stuart & Welland, Douglas, 1991. "The effects of rent asymmetries in markets characterized by advance production : A comparison of trading institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 15(3), pages 387-405, May.
    3. Noussair, Charles & Plott, Charles & Riezman, Raymond., . "An Experimental Investigation of the Patterns of International Trade," Working Papers 799, California Institute of Technology, Division of the Humanities and Social Sciences.
    4. Davis, Douglas D., 1999. "Advance production and Cournot outcomes: an experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 40(1), pages 59-79, September.
    5. Mestelman, Stuart & Welland, Douglas, 1987. "Advance production in oral double auction markets," Economics Letters, Elsevier, vol. 23(1), pages 43-48.
    6. Ashenfelter, O. & Currie, J. & Farber, H.S. & Spiegel, M., 1990. "An Experimental Comparison Of Dispute Rates In Alternative Arbitration Systems," Papers 55, Princeton, Woodrow Wilson School - Discussion Paper.
    7. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70, pages 322.
    8. Phillips, Owen R. & Menkhaus, Dale J., 2001. "Random shocks in experimental spot and forward auction markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(4), pages 545-560.
    9. Mestelman, Stuart & Welland, Deborah & Welland, Douglas, 1987. "Advance production in posted offer markets," Journal of Economic Behavior & Organization, Elsevier, vol. 8(2), pages 249-264, June.
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