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:||Apr 2003|
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- Vital Anderhub & Werner Güth & Ulrich Kamecke & Hans-Theo Normann, 2003.
"Capacity Choices and Price Competition in Experimental Markets,"
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CORE Discussion Papers RP
1474, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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