Market Experiments With Outside Options Of Consumer

Developed Internet and many convenient trading platforms appeared in the net make the search cost of transaction costs greatly reduced.Consumers are willing to search for other products with lower prices,so that outside options are real and effective for consumers.More than half a century later,as well as the world has become a "global village" now,it has theoretical value and important practical significance to discuss Coase's conjecture again under the condition that consumers have outside options.The hypothesis of product homogeneity is an important issue that extends from classical political economy to modern economics.Because of the limitation of conditions,many researches have to simplify for the "research method convenience",the product homogeneity hypothesis obviously does not conform to the product diversification characteristics of natural market.Outside options of consumers are the expansion of product homogeneity hypothesis,and the result of offering diversified products by manufacturers under fierce competition.However,this has brought difficulties for the market transaction pricing strategy.From the perspective of market trading institution,this dissertation studies the change of market equilibrium price in which consumers have outside options.Starting from the theory of political economy and institutional economics,tests the classic and extended Coase conjecture through experiments.And we draw the conclusion with new connotation,which enriches the economic view on this issue.After introducing outside options of consumers into the classical Coase conjecture,the setting of market environment has been changed,and the results of theoretical model study show that Coase conjecture,as the cornerstone of modern microeconomic theory,has failed.The results show that when consumers have outside options,monopolist of durable goods will offer monopoly prices in each time.This is contrary to the classical Coase conjecture: the monopoly price of durable goods will fall to competitive price which is equal to the marginal cost.Which is right and which is wrong? After introducing outside options of consumers into the classical Coase conjecture,is it really doesn't work anymore? How does it affect the change of market equilibrium?What are the implications for pricing strategies of the firm?We should improve the trading institution in the design of the experiment.Therefore,in order to match the change of market environment,the search process is introduced into the bargaining system which is still prevalent in the primitive and highly developed market economy.The experimental results show that the search behavior is very efficient.Usually,search behavior is no worse than bargaining.Most behavior of buyers conforms to the optimal stop rule of search.On the basis of bargaining game with incomplete bilateral information without outside option and with outside option,the theoretical model is predicted.When the trading framework is simple enough,comparing the predicted data with the experimental data,we find that the search behavior is very close to the prediction,while the bargaining behavior is biased from the prediction,but the behavior of buyers and sellers is basically the same.It is the interesting results that it is reasonable to design a market trading institution experiment with search process to test the classic Coase conjecture and the Coase conjecture that consumers have outside options.On this basis,the second experimental results show that external selection leads to a significant reduction in transaction prices,and does not change due to the impact of other factors such as the number of consumers and the delay cost,which has a strong robustness.Whether consumers have outside options(whether endogenous or exogenous)or not,the price decreases over time and converges to the equilibrium between complete monopoly and complete competition.This equilibriu price is neither the competitive low price of the traditional Coase conjecture nor the high monopolistic price of the Coase conjecture model having outside options.This conclusion is different from the classical Coase conjecture and the Coase conjecture having outside options,but it fits well with the economic reality.The innovation of this dissertation includes: first,with the increasing popularity of Internet shopping,search costs are greatly reduced,and consumers have the motivation to search for lower price.Therefore,the hypothesis that consumers have outside option is closer to the product diversification characteristic of natural market,and the revision of the simplify hypothesis of product homogeneity is effective and reasonable.Second,on the basis of the relationship between systematic market trading institution and market environment,when the market environment changes,we try to design a matching trading institution of the market,and make it as a controllable endogenous variable.Third,the outside options of consumers are divided into external options and internal options,which are endogenous variables.Fourth,under the different circumstances of consumers' outside options,whatever it is exogenous outside options or endogenous outside options,the static and dynamic equilibrium price is compared and analyzed,and the classic and extended Coase pricing theory is tested.These innovative researches rely on comparative analysis and experimental economics.