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Endogenous Market Institutions: Experimental Evidence

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  • Morten Søberg

Abstract

A wide variety of market institutions exist in the field and on the Internet. Examples are English auctions and two-sided marketplaces like the double auction where both buyers and sellers initiate prices. This paper investigates how the emergence of (different) market institutions is shaped by buyers’ and sellers’ institutional preferences. The experimental evidence reveals that both buyers and sellers in the main prefer market institutions that restrict the ability to make price offers to their side of the market. However, when buyers and sellers are allowed to express both first and second choices, the double auction emerges as the most viable market institution.

Suggested Citation

  • Morten Søberg, 2004. "Endogenous Market Institutions: Experimental Evidence," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 30, pages 91-119.
  • Handle: RePEc:noj:journl:v:30:y:2004:p:91-119
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    More about this item

    Keywords

    Market institutions; institutional preferences; voting rules; experimental economics;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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