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.
|Date of creation:||Jul 2002|
|Date of revision:|
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- Xiangkang Yin & Yew-Kwang Ng, 1995.
"Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes: A Case with Product Differentiation,"
1995.23, School of Economics, La Trobe University.
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- Vital Anderhub & Werner GÃ¼th & Ulrich Kamecke & Hans-Theo Normann, 2003.
"Capacity Choices and Price Competition in Experimental Markets,"
Springer, vol. 6(1), pages 27-52, June.
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- Owen R. Phillips & Charles F. Mason, 1992. "Mutual Forbearance in Experimental Conglomerate Markets," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 395-414, Autumn.
- 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.
- Muren, Astri, 2000. "Quantity precommitment in an experimental oligopoly market," Journal of Economic Behavior & Organization, Elsevier, vol. 41(2), pages 147-157, February.
- Mason, Charles F & Phillips, Owen R & Nowell, Clifford, 1992. "Duopoly Behavior in Asymmetric Markets: An Experimental Evaluation," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 662-70, November.
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