Partial equilibrium mechanism and inter-sectoral coordination: An experiment

Abstract

This study experimentally evaluates the performance of partial equilibrium mechanisms when different sectors run their mechanisms separately, despite the existence of complementarity between them. In our simple laboratory experiment setting that includes two sectors, each sector runs the top-trading-cycle mechanism. There is a Pareto-dominant equilibrium, but it requires coordination across sectors. Our results show that coordination failure occurs more frequently when there is asymmetry between the two sectors compared with the one-sector benchmark, even without inter-sectoral complementarity. When mechanisms are run sequentially across the two sectors, such failure is substantially reduced, compared with when they are run simultaneously.

A Game-Theoretic Exploration with Surplus Profit-Sharing in a Three-Channel Supply Chain, Featuring E-Commerce Dynamics

“…Buyback contracts can be used to incentivize the retailer to order more products, while quantity discount contracts can encourage the retailer to increase its order quantity (Zhang, Dong, Luo, & Segerstedt, 2014). However, the effectiveness of these mechanisms depends on the market conditions and the level of competition (Hanaki, Hayashi, Lombardi, & Ogawa, 2021).…”