Price Equilibrium-- wishful thinking?
Agents learn what to bid and price stabilizes to the sellers’ marginal cost..
- It is not a clean equilibrium. There is noise added because of network/machine delays.
We also notice a clean transition from monopoly to oligopoly to market-system as more sellers are added to the market.
- Price drops when new sellers come in, this is because they know nothing and bid randomly at first.
- When the sellers start to leave the price goes up again.
This type of smooth behavior is essential in a system where we expect goods (i.e. auctions) to appear and disappear regularly.
- We can not expect the UMDL to always be at an equilibrium.