Price-setting and attainment of equilibrium: posted offers versus an administered price

Sean M. Collins*, Duncan James, Maroš Servátka, Daniel Woods

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

The operation of the posted offer market with advance production environment (Mestelman and Welland, 1988), appropriately parameterized, differs from that of the market entry game (Selten and Güth, 1982), 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.

Original languageEnglish
Pages (from-to)277-293
Number of pages17
JournalGames and Economic Behavior
Volume106
DOIs
Publication statusPublished - Nov 2017

Keywords

  • market entry game
  • posted offer market
  • advance production
  • isomorphism
  • equilibration

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