The nature of excess : Investigating price dynamics 1
نویسندگان
چکیده
A Chamberlin market is a trading institution with multiple traders, decentralized bilateral bargaining and publicly declared transaction prices (Chamberlin (1948)). This paper investigates the determinants of price dynamics in Chamberlin markets as well as double oral auctions. We test and compare the excess supply model (Walras (1874, 1877, 1889, 1896) and the excess rent model (Smith (1962, 1965)) and find support for the excess rent model. Unlike existing studies, which rely on natural variation in the main treatment variable (the prevailing price), we implement randomized control in the main treatment variable. We find that Smith’s (1965) support for the excess rent model did not suffer from endogeneity bias. JEL codes: D41, D43, D44, C78
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