In the frictionless world of theory without transaction costs, allowance trading offers the potential of billions of dollars in savings when compared to traditional command and control regulation. It is therefore not surprising that regulators have embraced this approach in recent years to...

This chapter summarizes a laboratory experiment comparing four different trading institutions, in a random values environment with four single unit buyers and four single unit sellers. This chapter also summarizes the main findings on efficiency: the continuous double auction (CDA) and...

This chapter focuses on identifying the marginal impact of price signaling, holding all other environmental and institutional factors constant. Although price signaling often increases transaction prices, this increase is very often temporary. Equilibrium behavior may be unaffected by...

This chapter illustrates a mechanism capable of competitively allocating power through an electricity network in which loop flow and the unusual economic phenomenon caused by loop flow are anticipated and integrated into the competitive process. At the base of the complexity is Kirchoff's law...

Theoretically, it is not the case that markets will necessarily equilibrate even when the equilibrium is a unique, interior equilibrium. In his example prices always orbit around the equilibrium and thus never converge. That platform thus provides the starting point of the research. For the...

The experiments reported in this chapter explore the interaction of networks of markets. The issue is whether, and how long, chains of markets separated in time, space and participants might behave. The setting can be interpreted in two different ways. One is a system of vertical markets in...

The fundamental question addressed by this research is the degree to which the classical law of comparative advantage can be observed operating in experimental markets. The law holds that the local economic environments systematically influence, if not completely dictate, patterns of...

The experimental work demonstrates that markets have the capacity to collect information through a process of equilibration and that fact suggests the feasibility of creating a system of markets that have only a purpose of gathering information. The laboratory work suggests that theory and...

First, market prices can exhibit the type of instability predicted by classical dynamic models. Second, the conditions under which instability is observed are not captured by the cobweb model but such conditions are captured by models of the form developed by Marshall and Walras in which the...

The classical discussion of the consequences of non-convexities took a new form as principles of game theory became joined with the structural features of large economies of scale. New models suggest that the threat of competition, as opposed to the existence of an actual competitor, serve to...