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Price ceilings and firm-specific quantity restrictions in posted-offer markets

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1999
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Elsevier
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The effect of price ceilings and quantity controls in experimental posted-offer markets on market efficiency and total output is compared. Quantity controls adversely affect market performance relative to price ceilings. In the quota experiments contract and total surplus realization is lower than under equivalent price controls. Welfare outcomes, in terms of market efficiency, for price ceilings and quantity controls in a market setting are not the same, at least in the short run. Different welfare outcomes from equivalent controls are attributed to the manner in which the price and quantity search space is ‘censored’ by the price and quantity controls.
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Information Economics and Policy. 1999, vol. 11, nº 4, p. 389-406