A Market‐Clearing Classroom Experiment

Radim Boháček

Southern Economic Journal, 2002, vol. 69, issue 1, 189-194

Abstract: This paper describes a classroom experiment demonstrating the price mechanism and the clearing of markets in an endowment economy. Participants receive random endowments of two goods they may trade in order to maximize a given utility function. A market‐clearing price is reached when no mutually beneficial trades are possible. The outcome is truly endogenous, with no reservation prices or willingness to trade imposed on the participants. A problem set allows the participants to study the equilibrium outcome analytically. The experiment can be used in intermediate micro‐ and macroeconomic courses.

Date: 2002
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https://doi.org/10.1002/j.2325-8012.2002.tb00485.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:69:y:2002:i:1:p:189-194

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