EXPERIENCE AND INVENTORY MANAGEMENT IN DOUBLE-AUCTION MARKETS

Prior research indicates that double-auction markets with inexperience d traders and production to demand consistently perform very close to the competitive ideal, with high efficiency and average prices in the competitive equilibrium range. When the environment becomes more compl ex, with the introduction of advance production and costless inventory carryover, the efficiency of the double-auction market with inexperie nced traders is reduced, and production and sales are lower, in compar ison with the production-to-demand double auction market. The central finding of this paper is that, even when traders are experienced, the efficiency losses associated with this more complex double-auction env ironment remain.