Price-Setting and Attainment of Equilibrium: Posted Offers Versus an Administered Price
73 Pages Posted: 21 Sep 2017
Date Written: September 19, 2017
The operation of the posted offer market with advance production environment, appropriately parameterized, differs from that of the market entry game, appropriately presented, only in terms of price-setting. We establish the effect of this difference in price-setting on attainment of the competitive equilibrium allocation while controlling for effects relating to the presentation of the market entry game and to the stationarity or non-stationarity of environment. Free posting of prices promotes convergence to the competitive equilibrium allocation, while the typical market entry game data can be characterized as displaying cycling prices.
Keywords: market entry game, posted offer market, advance production, isomorphism, equilibration
JEL Classification: C9, C91, C4
Suggested Citation: Suggested Citation