Durable-Goods Monopoly: Laboratory Market and Bargaining Experiments

Posted: 29 Jun 2000

See all articles by Stanley S. Reynolds

Stanley S. Reynolds

University of Arizona - Department of Economics

Abstract

Results from single-period monopoly experiments (nondurable environment) are compared with results from multiperiod 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.

JEL Classification: C90, L12

Suggested Citation

Reynolds, Stanley S., Durable-Goods Monopoly: Laboratory Market and Bargaining Experiments. Available at SSRN: https://ssrn.com/abstract=228750

Stanley S. Reynolds (Contact Author)

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States
(520) 621-6251 (Phone)
(520) 626-4623 (Fax)

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