Abstract
Results from single-period monopoly experiments (nondurable environment) are compared with results from multiperiod monopoly experiments that have features of a durable-goods environment. Average prices were below the static monopoly benchmark price in all settings. Observed initial prices were higher in multiperiod experiments than in single-period experiments, in contrast to equilibrium predictions. Prices in multiperiod experiments tended to fall over time; there was less price cutting in market experiments than in bargaining experiments. There was substantial demand withholding by buyers in multiperiod experiments. A version of bounded rationality is a promising candidate for explaining deviations from equilibrium predictions.
Original language | English (US) |
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Pages (from-to) | 375-394 |
Number of pages | 20 |
Journal | RAND Journal of Economics |
Volume | 31 |
Issue number | 2 |
DOIs | |
State | Published - 2000 |
ASJC Scopus subject areas
- Economics and Econometrics