CaltechAUTHORS
  A Caltech Library Service

Market stability: backward bending supply in a laboratory experimental market

Plott, Charles R. (2000) Market stability: backward bending supply in a laboratory experimental market. Economic Inquiry, 38 (1). pp. 1-18. ISSN 0095-2583. http://resolver.caltech.edu/CaltechAUTHORS:20140224-141107214

[img] PDF (sswp 1067 - published) - Published Version
Restricted to Caltech community only
See Usage Policy.

1421Kb

Use this Persistent URL to link to this item: http://resolver.caltech.edu/CaltechAUTHORS:20140224-141107214

Abstract

This article investigates the stability properties of markets with backward-bending supply curves. Parameters are chosen so that the two classic models of price dynamics, the Walrasian model and the Marshallian model, give opposite predictions. The results are (1) market instability can be observed, and (2) in the backward-bending case stability is captured by the Walrasian model and the Marshallian model of dynamics is rejected. Previous experiments have demonstrated that the Marshallian model works in the forward-falling case. Thus, which theory of dynamics is appropriate for a market depends on the underlying reasons for demand and supply shapes.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1111/j.1465-7295.2000.tb00001.xDOIArticle
http://onlinelibrary.wiley.com/doi/10.1111/j.1465-7295.2000.tb00001.x/abstractPublisherArticle
http://resolver.caltech.edu/CaltechAUTHORS:20170810-150248660Related ItemWorking Paper
Alternate Title:Market stability: Backward-bending supply in a laboratory experimental market - 1999 Presidential Address Western Economic Association
Additional Information:© 2000 Western Economic International. Article first published online: 26 Mar. 2007. A major acknowledgement is given to Ken Andrews and Erik Hiller. As undergraduates in experimental economics courses in the late 1980s they were full partners in the early development of this project. They participated in the development of instructions, the design of parameters and the execution of the experiments. Unfortunately, graduation from Caltech precluded their further participation. The financial support of the National Science Foundation and the support of the Caltech Laboratory for Experimental Economics and Political Science are gratefully acknowledged. Special thanks go to Dan Richardson, John Patty and Chris Anderson, who helped as research assistants.
Group:Social Science Working Papers
Funders:
Funding AgencyGrant Number
NSFUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Other Numbering System:
Other Numbering System NameOther Numbering System ID
Social Science Working Paper1067
Classification Code:JEL: C92, D5, D41, D44
Record Number:CaltechAUTHORS:20140224-141107214
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20140224-141107214
Official Citation:Plott, C. (2000), Market stability: backward-bending supply in a laboratory experimental market. 1999 Presidential address Western Economic Association. Economic Inquiry, 38: 1–18. doi: 10.1111/j.1465-7295.2000.tb00001.x
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43953
Collection:CaltechAUTHORS
Deposited By: Susan Vite
Deposited On:24 Feb 2014 23:13
Last Modified:06 Nov 2017 23:05

Repository Staff Only: item control page