Demand shocks, advance production and market power: some lessons about markets from the laboratory
✍ Scribed by Douglas D. Davis; K. Ramagopal
- Publisher
- John Wiley and Sons
- Year
- 1998
- Tongue
- English
- Weight
- 181 KB
- Volume
- 19
- Category
- Article
- ISSN
- 0143-6570
No coin nor oath required. For personal study only.
✦ Synopsis
This paper summarizes some recent research pertaining to laboratory markets, and then discusses some of the implications of this research for applied economics and policy. Three results are discussed: (a) in one-sided markets where sellers' post-prices price-tracking response to demand shocks is very poor; (b) despite the prominence of the Cournot model as a centerpiece for applied research, it is very difficult to construct an environment where Cournot outcomes are observed; (c) market power, or the capacity of sellers to unilaterally deviate from the competitive prediction, is a prominent characteristic in short-run price-setting contexts.