A Limit of Bilateral Contracting Institutions
Mark Van Boening and
Nathaniel Wilcox ()
Economic Inquiry, 2005, vol. 43, issue 4, 840-854
Nonconvexities undermine the efficiency of the usually robust "double auction" or DA market institution. We experimentally examine two modified DAs that allow for particularly rich bilateral contracting such as arbitrarily nonlinear pricing. The first allows for arbitrarily nonlinear pricing but should not necessarily promote it; the second should promote efficient nonlinear pricing. Experiments support predictions on the emergence of nonlinear pricing, but not those concerning efficiency. Coordination problems are the culprit. We conclude that institutions capable of dealing with some nonconvexities must frequently provide multilateral contracting possibilities not permitted by DA rules and other market-like bilateral contracting institutions. (JEL C92, D49, L19) Copyright 2005, Oxford University Press.
JEL-codes: C92 D49 L19 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:oup:ecinqu:v:43:y:2005:i:4:p:840-854
Ordering information: This journal article can be ordered from
Access Statistics for this article
Economic Inquiry is currently edited by Preston McAfee
More articles in Economic Inquiry from Western Economic Association International Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().