Wednesday, December 20, 2017
Collins, Sean M. ; James, Duncan ; Servátka, Maroš ; Woods, Daniel investigate 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 Gueth, 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.