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

Sean M. Collins; Duncan James; Maroš Servátka; Daniel Woods

doi:10.1016/j.geb.2017.10.012

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

Macquarie Graduate School of Management

Research output: Contribution to journal › Article › peer-review

3 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 language	English
Pages (from-to)	277-293
Number of pages	17
Journal	Games and Economic Behavior
Volume	106
DOIs	https://doi.org/10.1016/j.geb.2017.10.012
Publication status	Published - Nov 2017

Keywords

market entry game
posted offer market
advance production
isomorphism
equilibration

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10.1016/j.geb.2017.10.012

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title = "Price-setting and attainment of equilibrium: posted offers versus an administered price",

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 G{\"u}th, 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.",

keywords = "market entry game, posted offer market, advance production, isomorphism, equilibration",

author = "Collins, {Sean M.} and Duncan James and Maro{\v s} Serv{\'a}tka and Daniel Woods",

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doi = "10.1016/j.geb.2017.10.012",

language = "English",

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AU - Servátka, Maroš

AU - Woods, Daniel

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AB - 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.

KW - market entry game

KW - posted offer market

KW - advance production

KW - isomorphism

KW - equilibration

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VL - 106

SP - 277

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JO - Games and Economic Behavior

JF - Games and Economic Behavior

ER -

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

Abstract

Keywords

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