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Limit price
About: Limit price is a research topic. Over the lifetime, 4865 publications have been published within this topic receiving 148546 citations.
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TL;DR: In this paper, the authors compare the performance of a discriminatory price auction with a uniform price auction (UPA), strictly controlling for unilateral market power, and find that in a no market power design, prices in a DPA converge to the high prices of a UPA with structural market power.
Abstract: A “pay-as-offered” or discriminatory price auction (DPA) has been proposed to solve the problem of inflated and volatile wholesale electricity prices. Using the experimental method we compare the DPA with a uniform price auction (UPA), strictly controlling for unilateral market power. We find that a DPA indeed substantially reduces price volatility. However, in a no market power design, prices in a DPA converge to the high prices of a uniform price auction with structural market power. That is, the DPA in a no market power environment is as anti-competitive as a UPA with structurally introduced market power.
141 citations
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TL;DR: In this paper, the authors used publicly available data on the sales ranks of about 20,000 books to derive quantity proxies at the two leading online booksellers, and matched this information to prices, directly estimating the elasticities of demand facing both merchants as well as creating a price index for online books.
Abstract: Despite the interest in measuring price sensitivity of online consumers, most academic work on Internet commerce is hindered by a lack of data on quantity. In this paper we use publicly available data on the sales ranks of about 20,000 books to derive quantity proxies at the two leading online booksellers. Matching this information to prices, we can directly estimate the elasticities of demand facing both merchants as well as create a price index for online books. The results show significant price sensitivity at both merchants but demand at Barnes and Noble is much more price-elastic than is demand at Amazon. The data also allow us to estimate the magnitude of bias in the CPI due to the rise of Internet sales.
140 citations
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TL;DR: In this paper, it is shown that the information requirement cannot be substantially reduced for any convergent price mechanism, that is for price mechanisms expressed in terms of a difference or differential equation where the solutions converge to a competitive equilibrium.
Abstract: It is known that the price mechanism whereby the rate of change of a price is proportional to the excess demand of the corresponding commodity need not converge to a competitive equilibrium for a pure exchange economy with more than two commodities. On the other hand, there exist convergent price mechanisms, similar to the Newton iterative process, where the rate of change of the prices is determined by the excess demand and the marginal excess demands of all the commodities. This is a considerable informational requirement. It is shown that this requirement cannot be substantially reduced for any convergent price mechanisms, that is for price mechanisms expressed in terms of a difference or differential equation where the solutions converge to a competitive equilibrium.
140 citations
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TL;DR: In this paper, the authors examine a dynamic model of price competition in defense procurement that incorporates the experience curve, asymmetric cost information, and the availability of a higher cost alternative system, and characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information.
Abstract: We examine a dynamic model ofprice competition in defense procurement that incorporates the experience curve, asymmetric cost information, and the availability of a higher cost alternative system. We model acquisition as a two-stage process in which initial production is governed by a contract between the government and the developer. Competition is then introduced by an auction in which a second source bids against the developer for remaining production. We characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information. When high costs are revealed, these contracts result in a credible cutoff of new system production in favor of the still higher cost alternative system.
139 citations
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TL;DR: An experiment examining a simple clearinghouse model that generates price dispersion finds that an increase in the fraction of informed consumers leads to more competitive pricing for all consumers, and that when more firms enter the market, prices to informed consumers become more competitive while prices to captive customers become less competitive.
139 citations