Durable-goods monopoly: Laboratory market and bargaining experiments

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

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 languageEnglish (US)
Pages (from-to)375-394
Number of pages20
JournalRAND Journal of Economics
Volume31
Issue number2
DOIs
StatePublished - 2000

ASJC Scopus subject areas

  • Economics and Econometrics

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