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Cyclical Double-Auction Markets With And Without Speculators, Arlington W. Williams, Vernon L. Smith
Cyclical Double-Auction Markets With And Without Speculators, Arlington W. Williams, Vernon L. Smith
Economics Faculty Articles and Research
This study reports the results of 18 computerized 'double-auction' market experiments characterized by cycling excess demand. Two such market designs are studied: one with stationary supply and cycling demand, the other with cycling supply and demand. Data from a series of control experiments under conditions of intertemporal isolation (autarky) are compared with data from experiments where the two cyclical market phases are linked by a subset of agents (speculators). Allowing intertemporal speculation is found to be a significant treatment variable in both market designs; however, price convergence patterns are not robust with respect to the design change.
Natural Monopoly And The Contestable Markets Hypothesis: Some Preliminary Results From Laboratory Experiments, Don R. Coursey, R. Mark Isaac, Vernon L. Smith
Natural Monopoly And The Contestable Markets Hypothesis: Some Preliminary Results From Laboratory Experiments, Don R. Coursey, R. Mark Isaac, Vernon L. Smith
Economics Faculty Articles and Research
The concept of natural monopoly is one of the most familiar in economics. Many supposed natural monopolies are the object of widespread state, local, and federal regulation. It was in addressing issues of public utility regulation that Demsetz laid the foundation for an alternative scenario for decreasing cost markets. Demsetz's article promoted a debate over whether a formal auction system might provide a practical approach to monopoly control. This literature is rich in examining the practical difficulties of implementing such an institution. The important characteristic of the contestable markets hypothesis, as we interpret it, is that at least two firms …