Date: 2023
Type: Article
Competition with indivisibilities and few traders
Experimental economics, 2023, Vol. 26, pp. 78-106
MARTINELLI, César, WANG, Jianxin, ZHENG, Weiwei, Competition with indivisibilities and few traders, Experimental economics, 2023, Vol. 26, pp. 78-106
- https://hdl.handle.net/1814/74952
Retrieved from Cadmus, EUI Research Repository
We study minimal conditions for competitive behavior with few agents. We adapt a price-quantity strategic market game to the indivisible commodity environment commonly used in double auction experiments, and show that all Nash equilibrium outcomes with active trading are competitive if and only if there are at least two buyers and two sellers willing to trade at every competitive price. Unlike previous formulations, this condition can be verified directly by checking the set of competitive equilibria. In laboratory experiments, the condition we provide turns out to be enough to induce competitive results, and the Nash equilibrium appears to be a good approximation for market outcomes. Subjects, although possessing limited information, are able to act as if complete information were available in the market.
Additional information:
Published online: 28 September 2022
Cadmus permanent link: https://hdl.handle.net/1814/74952
Full-text via DOI: 10.1007/s10683-022-09772-9
ISSN: 1386-4157; 1573-6938
Publisher: Springer
Sponsorship and Funder information:
This article was published Open Access with the support from the EUI Library through the CRUI - Springer Transformative Agreement (2020-2024)
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