symposium articles: Concurrent trading in two experimental markets with demand interdependence

Arlington Walton Williams (), John O. Ledyard (), Steven Gjerstad () and Vernon L. Smith ()
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John O. Ledyard: Division of Humanities and Social Sciences, 228 - 77, California Institute of Technology,Pasadena, CA 91125, USA
Vernon L. Smith: Economics Science Laboratory, McClelland Hall 116, University of Arizona,Tuscon, AZ 85721, USA
Authors registered in the RePEc Author Service: Vernon Smith and Vernon L. Smith

Economic Theory, 2000, vol. 16, issue 3, pages 511-528

Abstract: We report results from fifteen computerized double auctions with concurrent trading of two commodities. In contrast to prior experimental markets, buyers' demands are induced via CES earnings functions defined over the two traded goods, with a fiat money expenditure constraint. Sellers receive independent marginal cost arrays for each commodity. Parameters for buyers' earnings functions and sellers' costs are set to yield a stable, competitive equilibrium. In spite of the complexity introduced by the demand interdependence, the competitive model is a good predictor of market outcomes, although prices tend to be above (below) the competitive prediction in the low-price (high-price) market.

Keywords: Induced utility; General equilibrium; Double auction. (search for similar items in EconPapers)
JEL-codes: C92 D44 D51 D83 (search for similar items in EconPapers)
Date: 2000-08-11
Note: Received: April 30, 1999; revised version: June 7, 1999

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