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

Sean M. Collins, Duncan James, Maroš Servátka () and Daniel Woods

Games and Economic Behavior, 2017, vol. 106, issue C, 277-293

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.

Keywords: Market entry game; Posted offer market; Advance production; Isomorphism; Equilibration (search for similar items in EconPapers)
JEL-codes: D02 D47 C90 C72 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:gamebe:v:106:y:2017:i:c:p:277-293