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Industrial Organization Theory and Experimental Economies

Plott, Charles R. (1982) Industrial Organization Theory and Experimental Economies. Journal of Economic Literature, 20 (4). pp. 1485-1527. ISSN 0022-0515. http://resolver.caltech.edu/CaltechAUTHORS:20140225-153918349

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Abstract

The Introduction of laboratory experimentation in economics was motivated by theories of industrial organization and market performance. The first published market experiments were those of Edward H. Chamberlin (1948). He explored the behavioral characteristics of markets he described as being "purely" but not "perfectly" competitive and he thought that the principles of monopolistic competition would be more useful than the textbook theory of demand and supply in explaining the observed behavior. Austin C. Hoggatt (1959) and Heinz Sauermann and Reinhard Selten (1959) both focused on markets with three competitors and independently provided the first experimental evidence that the Cournot model might be a reasonably accurate description of oligopolistic behavior. Oligopoly and bilateral monopoly motivated the classic work of Lawrence E. Fouraker and Sidney Siegel (1963) which introduced several of the techniques still used today. Vernon L. Smith's (1962) sensitivity to the organization of the U.S. security industry led him to the fundamental discovery that the law of competitive demand and supply can be observed operating in an experimental environment. The field of experimental economics has experienced substantial evolution during the intervening twenty years. This paper is an attempt to provide an introduction to the methods and an assessment of available results which might now be useful to the students of industrial organization.


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Additional Information:© 1982 American Economic Association The financial support of the Federal Trade Commission, the National Science Foundation, the Caltech Program for Enterprise and Public Policy, the Guggenheim Foundation and the Center for Advanced Study in the Behavioral Sciences at Stanford is gratefully acknowledged. Comments by Ron Harstad, Roger Noll, Steve Salop, Reinhard Selten and Vernon Smith have been helpful and the valuable assistance of Barbara Yandell cannot be overemphasized.
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Federal Trade commissionUNSPECIFIED
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Caltech Program for Enterprise and Public PolicyUNSPECIFIED
Guggenheim FoundationUNSPECIFIED
Stanford University Center for Advance Study in the Behavioral SciencesUNSPECIFIED
Record Number:CaltechAUTHORS:20140225-153918349
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20140225-153918349
Official Citation:Industrial Organization Theory and Experimental Economics Charles R. Plott Journal of Economic Literature , Vol. 20, No. 4 (Dec., 1982) , pp. 1485-1527 Published by: American Economic Association Article Stable URL: http://www.jstor.org/stable/2724830
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43995
Collection:CaltechAUTHORS
Deposited By: Susan Vite
Deposited On:26 Feb 2014 16:32
Last Modified:05 May 2014 22:30

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