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CONGESTION MODELS WITH CONSISTENT CONJECTURES
Author(s) -
Holloway Garth J.
Publication year - 1996
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1996.tb00597.x
Subject(s) - externality , economics , resource allocation , microeconomics , econometrics , resource (disambiguation) , mathematical economics , computer science , computer network , market economy
This paper demonstrates that, in situations in which a cumulative externality exists, the basic nature and extent of resource misallocation may be substantially less than we imagine. This conclusion stems from deriving consistent conjectures in a unified framework in which congestion is present. Experiments support the conclusion that, when numbers of agents are small, when there is little heterogeneity among them, and when they have the opportunity to observe each other during repeated experiment, the market allocation may be efficient.