Price-Setting and Attainment of Equilibrium: Posted Offers Versus an Administered Price

73 Pages Posted: 21 Sep 2017

See all articles by Sean Collins

Sean Collins

Fordham University

Duncan James

Fordham University

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Daniel Woods

University of Canterbury - Economics and Finance

Date Written: September 19, 2017

Abstract

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

Collins, Sean and James, Duncan and Servátka, Maroš and Woods, Daniel, Price-Setting and Attainment of Equilibrium: Posted Offers Versus an Administered Price (September 19, 2017). Available at SSRN: https://ssrn.com/abstract=3040009 or http://dx.doi.org/10.2139/ssrn.3040009

Sean Collins

Fordham University

113 West 60th Street
New York, NY 10023
United States

Duncan James

Fordham University ( email )

United States

Maroš Servátka (Contact Author)

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory ( email )

Sydney
Australia

Daniel Woods

University of Canterbury - Economics and Finance ( email )

Private Bag 4800
Christchurch
New Zealand

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