Testing Neoclassical Competitive Theory in Multilateral Decentralized Markets

John List

Natural Field Experiments from The Field Experiments Website

Abstract: Walrasian tatonnement has been a fundamental assumption in economics ever since Walras' general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in "double-auction" markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets- the sports card and collector pin markets-I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.

Date: 2004
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Related works:
Journal Article: Testing Neoclassical Competitive Theory in Multilateral Decentralized Markets (2004)
Working Paper: Testing neoclassical competitive theory in multi-lateral decentralized markets (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:feb:natura:00490

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