nach oben

Erschienen in:

2022 | OriginalPaper | Buchkapitel

3. Revisiting Marshallian Versus Walrasian Stability in an Experimental Market

verfasst von : Junyi Shen, Ken-Ichi Shimomura, Takehiko Yamato, Tokinao Ohtaka, Kiyotaka Takahashi

Erschienen in: Theory and History in Regional Perspective

Verlag: Springer Nature Singapore

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

We study dynamics in pit market trading by a laboratory experiment. Our exchange economy model contains two types of consumers and two kinds of commodities, and three competitive equilibria exist. The two equilibria with the lowest and the highest relative prices are beneficial for one type of the consumers, and the intermediate price gives an equitable allocation. The theory of Walrasian tatonnement dynamics predicts that relative prices diverge from the intermediate equilibrium towards the lowest equilibrium or the highest equilibrium depending on initial prices. On the other hand, Marshallian quantity adjustment process leads the total supplied volume to the intermediate equilibrium only regardless of initial states. In order to examine how robust the equilibrium selection is, we conducted a manual experiment of pit market trading with different combinations of ethnicities of subjects in Kenya. Our result shows strong support for the convergence to the intermediate equilibrium, which is unstable in Walrasian tatonnement dynamics and is stable in Marshallian quantity adjustment process.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel When Is Competition Between Cities for Members of the Creative Class Efficient?

Nächstes Kapitel Analysis of Spatial Economic System and Adaptive Transportation Policy for Regional Welfare Improvement

Nur mit Berechtigung zugänglich

We would like to give special thanks to Charles Plott for pointing out this issue.

We would like to thank Shyam Sunder, who suggested us to check Marshallian stability of equilibria for our model.

Shapley and Shubik (1977) is a pioneering work that presents a simple exchange economy model with multiple competitive equilibria. Different from the current study, they investigated the Walrasian stability of the three equiribria, but did not discuss the Marshallian stability. See also Sakai (2020) for the Walrasian stability of multiple equilibria in two-good economies.

We only need to focus on trades of good X because, based on the Walras’ law, the market of good X is clear when that of good Y is clear. Notice that Walras’ law holds in our model since the utility functions of all consumers satisfy local nonsatiation.

See Appendix 1 for the formal definitions of local stability and instability of equilibrium according to Walrasian price adjustment process and those according to Marshallian quantity adjustment process.

We investigated whether ethnicity affects subjects’ trading behavior in another study (see Shimomura and Yamato (2012)). However, there are several differences in both the experimental design and procedures between that study and the current one (see detailed discussions in Sect. 3.5).

The experimental instruction and payoff tables are provided in Appendices 2 and 3, respectively..

We set this floor price only, but it is more desirable to set a ceiling price such as 4 to avoid extremely high price ratio trading. Fortunately, these extremely high ratio trades were not observed in our experimental data.

In Fig. 3.4, Panel I is for the ratios of the three equilibria bundles and Panel II is for the ratios of bundles near these three equilibria.

Here the distance of each subject at each period is defined as the Euclidean distance, which can be written as \( \sqrt{{\left({X}_{it}-12\right)}^2+{\left({Y}_{it}-15\right)}^2} \) for type 1 subjects and \( \sqrt{{\left({X}_{it}-18\right)}^2+{\left({Y}_{it}-15\right)}^2} \)for type 2 subjects, where i and t refer to subject and period indices, and X and Y stand for a subject’s end-of-period holdings of commodities X and Y, respectively.

For other two initial price intervals, the prices in Period 5 are also significantly not equal to the middle equilibrium price.

By Walras’ law, we only need to focus on market of commodity X. In addition, by feasibility it is sufficient to consider the movements in final holdings of subjects of type 1 only.

The panel data regression was run by regressing the variable Final holdings of X on the variable Period, and the Wilcoxon signed-rank test was conducted to test whether the end-of-period holdings of X was equal to 12. These results are available upon request.

These results are not reported here, but are available upon request.

In our data, both two-tailed t-test and Wilcoxon rank sum test cannot reject that mean and median payoffs are the same in Period 5, respectively (t test: p = 0.6294; Wilcoxon rank sum test: p = 0.7022).

We call an open interval containing the real number x* a neighborhood of x*.

Anderson CM, Plott CR, Shimomura K-I, Granat S (2004) Global instability in experimental general equilibrium: the scarf example. J Econ Theory 115:209–249CrossRef

Bossaerts P, Plott CR (2008) From Market Jaws to the Newton method: the geometry of how a market can solve systems of equations. In: Plott CR, Smith VL (eds) Handbook of experimental economics results, vol 1. Elsevier B.V, Amsterdam

Chamberlin EH (1948) An experimental imperfect market. J Polit Econ 56:95–108CrossRef

Crockett S, Oprea R, Plott CR (2010) Extreme Walrasian dynamics: the Gale example. Am Econ Rev 101:3196–3220CrossRef

Gale D (1963) A note on global instability of competitive equilibrium. Nav Res Logist Q 10:81–87CrossRef

Plott CR (2000) Market stability: backward-bending supply in a laboratory experimental market. Econ Inq 38:1–18CrossRef

Plott CR, George G (1992) Marshallian vs. Walrasian stability in an experimental market. Econ J 102:437–460CrossRef

Plott CR, Pogorelskiy K (2015) Call market experiments: efficiency and price discovery through multiple calls and emergent Newton adjustments. Social science working paper 1404. Division of the Humanities and Social Sciences, California Institute of Technology

Plott CR, Smith J (1999) Instability of equilibria in experimental markets: upward-sloping demands, externalities, and fad-like incentives. South Econ J 65:405–426

Sakai Y (2020) The Hicks-Morishima approach reconsidered: another look at the interdependence of several markets. The Hikone Ronso no. 424, pp 72–87

Scarf H (1960) Some examples of global instability of the competitive equilibrium. Int Econ Rev 1:157–171CrossRef

Shapley LS, Shubik M (1977) An example of a trading economy with three competitive equilibria. J Polit Econ 85:873–875CrossRef

Shimomura K-I, Yamato T (2012) Impact of ethnicities on market outcome: results of market experiments in Kenya. In: Hino H, Lonsdale J, Ranis G, Stewart F (eds) Ethnic diversity and economic stability in Africa. Cambridge University Press, Cambridge, pp 286–313CrossRef

Smith VL (1962) An experimental study of competitive market behavior. J Polit Econ 70:111–137CrossRef

Titel: Revisiting Marshallian Versus Walrasian Stability in an Experimental Market
verfasst von: Junyi Shen
Ken-Ichi Shimomura
Takehiko Yamato
Tokinao Ohtaka
Kiyotaka Takahashi
Verlag: Springer Nature Singapore
Buch: Theory and History in Regional Perspective
Print ISBN: 978-981-16-6694-0

Electronic ISBN: 978-981-16-6695-7

Copyright-Jahr: 2022
DOI: https://doi.org/10.1007/978-981-16-6695-7_3

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Technik"

Springer Professional "Wirtschaft"