Advance Production Duopolies and Posted Prices or Market-Clearing Prices
The paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Duopolies in which producers with complete information about market demand make advance-production output decisions and sell their output at a clearing price (Cournot markets) are contrasted with comparable duopolies who post prices for sale through an efficient rationing mechanism (Kreps-Scheinkman or KS markets). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in Cournot markets. With experience, the differences disappear. If trading sessions last sufficiently long, it is likely that differences will disappear with inexperienced participants.
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- Boccard, Nicolas & Wauthy, Xavier, 2000.
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"Capacity choices and price competition in experimental markets,"
SFB 373 Discussion Papers
2001,10, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
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- repec:ltr:wpaper:1995.23 is not listed on IDEAS
- David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
- Xiangkang Yin & Yew-Kwang Ng, 1995.
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1995.23, School of Economics, La Trobe University.
- Yin, Xiangkang & Ng, Yew-Kwang, 1997. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes: A Case with Product Differentiation," Australian Economic Papers, Wiley Blackwell, vol. 36(68), pages 14-22, June.
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