Duopolies with Advance Production and Posted or Market Clearing Prices
نویسندگان
چکیده
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. Corresponding author: Stuart Mestelman Department of Economics McMaster University Hamilton, Ontario L8S 4M4 Canada Phone: 905-525-9140 x23822 e-mail: [email protected] 1 This is consistent with producers bringing their output to a market in which units are sold through a competitive sealed-bid auction. Duopolies with Advance Production and Posted or Market Clearing Prices
منابع مشابه
Advance Production, Inventories and Market Power: An Experimental Investigation
This paper reports an experiment conducted to assess the effects of alterations in production conditions and product durability on market power in Bertrand-Edgeworth duopolies. Experiment results indicate that advance production increases market power in the sense that mean transaction prices increase relative to static Nash equilibrium predictions for a baseline market. In a similar way, a sim...
متن کاملSupra-Competitive Prices and Market Power in Posted-Offer Experiments
This paper reports the results of a series of posted-offer experiments designed to examine the effects of static market power on prices, when other factors such as excess supply, the number of sellers, and dynamic incentives are held constant. Static market power results in a dramatic price increase in posted-offer triopolies with complete demand information. The effects of market power are not...
متن کاملDynamic Competition with Random Demand and Costless Search: A Theory of Price Posting
This paper studies a dynamic model of perfectly competitive price posting under demand uncertainty. Firms must produce output in advance. After observing aggregate sales in prior periods, firms post prices for their unsold output. Consumers arrive at the market in random order, observe the posted prices, and either purchase at the lowest available price or delay their purchase decision. Every s...
متن کاملPure Numbers Effects, Market Power, and Tacit Collusion in Posted Offer Markets
This paper studies the effects of seller concentration and static market power on tacit collusion in extensively repeated laboratory posted-offer markets. Contrary to the implications of some earlier research, we find that tacit collusion does not become pervasive with extensive repetition. In a ‘strong no power’ design persistently competitive outcomes are observed in markets with three or fou...
متن کاملA method to calculate the acceptance probability and risk of rejection of bid prices on the electricity market
After restructuring, Iran’s electricity market has become one of the most competitive markets in which generation companies offer their proposed price on several price benches. So, the decisions in this market can use statistical concepts. In this paper, a conceptual model is presented according to simultaneous analysis of probabilistic distribution for historical data of market clearing price ...
متن کامل