Quantity Precommitment with Price Competition versus Quantity Precommitment with Market Clearing Prices in the Laboratory

David Goodwin and Stuart Mestelman

Department of Economics Working Papers from McMaster University

Abstract: The paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Cournot (C) duopolies (quantity precommitment and a price determined to clear the market) are contrasted with Kreps-Scheinkman (KS) duopolies (quantity precommitment and posted prices). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in C markets. With experience, the differences disappear.

Keywords: Duopoly; Laboratory experiment; Quantity precommitment; Posted prices; Price competition; Market-clearing prices; Experience (search for similar items in EconPapers)
JEL-codes: C92 D43 L13 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2009-06
New Economics Papers: this item is included in nep-com, nep-exp and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2009-04

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