Price controls, non-price quality competition, and the nonexistence of competitive equilibrium

• 成果类型: Article
• 署名作者: Hatfield, John William; Plott, Charles R.; Tanaka, Tomomi
• 署名单位: University of Texas System; University of Texas Austin; California Institute of Technology; The World Bank
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2016.06.012
• 发表日期: 2016
• 页码: 134-163
• 关键词: Matching; STABILITY; competitive equilibrium; core; Price controls

摘要

We investigate how price ceilings and floors affect outcomes in continuous time, double auction markets with discrete goods and multiple qualities. When price controls exist, the existence of competitive equilibria is no longer guaranteed; hence, we investigate the nature of non-price competition and how markets might evolve in its presence. We develop a quality competition model based on matching theory. Equilibria of the quality competition model always exist in such price-constrained markets; moreover, they naturally correspond to competitive equilibria when competitive equilibria exist. Additionally, we characterize the set of equilibria of the quality competition model in the presence of price restrictions. In a series of experiments, we find that market outcomes closely conform to the predictions of the model. In particular, price controls induce non price competition between agents both in theory and in the experimental environment; market behaviors result in allocations close to the predictions of the model. (C) 2016 Elsevier Inc. All rights reserved.