FIRM-SPECIFIC OUTPUT LIMITS IN A POSTED OFFER MARKET - DISTRIBUTIVE AND EFFICIENCY EFFECTS

In this paper we look at the effect of the removal of firm-specific binding and non-binding quotas in experimental posted offer markets. In the experiments we see that the effect of both binding and non-binding quotas is carried over to the deregulated regime. The effect of non-binding quotas, while being in effect, on the number of contracts is (statistically) significant. We also see that distribution of surplus may actually affect the convergence path of prices. That is, with binding quotas price convergence is observed from below the competitive equilibrium.