Journal
CANADIAN JOURNAL OF AGRICULTURAL ECONOMICS-REVUE CANADIENNE D AGROECONOMIE
Volume 56, Issue 2, Pages 179-194Publisher
WILEY
DOI: 10.1111/j.1744-7976.2008.00124.x
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Basic economic theory predicts that a consumer's willingness to pay for a good is affected by the availability of complements and substitutes. In an auction setting, this theory implies that the presence of complements would increase bid prices for a good, while the presence of substitutes would decrease bid prices for a good. We designed an experiment that allows the calculation of inverse elasticities, the inverse-demand equivalent of conventional price elasticities. Our results show that the availability of complements and substitutes affects bids in the expected directions. This finding has important implications for researchers who design experimental auctions.
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