Marshallian vs. Walrasian Stability in an Experimental Market.

Twelve markets were studied. All markets had downward sloping supply functions created by Marshallian-type external economies in which the costs of individual firms increase with their own volume but decrease with the market volume of all other firms. The conditions were such that the model dp/dt = f (excess demand), typically called the Walrasian theory of dynamics, gives predictions about the dynamics of market behavior opposite of the model dq/dt = "phi" (demand price minus supply price), which is typically called the Marshallian theory. The market organizations studied were double auction, sealed bid/offer and (secant) tatonnement. In all cases the Marshallian theory of dynamics was the better model of market behavior. Copyright 1992 by Royal Economic Society.