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Simulating Price-Taking

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  • Lucas M. Engelhardt

Abstract

In this article, the author presents a price-takers' market simulation geared toward principles-level students. This simulation demonstrates that price-taking behavior is a natural result of the conditions that create perfect competition. In trials, there is a significant degree of price convergence in just three or four rounds. Students find this simulation to be a fun, educational experience that adds value to their understanding of competitive markets.

Suggested Citation

  • Lucas M. Engelhardt, 2015. "Simulating Price-Taking," The Journal of Economic Education, Taylor & Francis Journals, vol. 46(4), pages 430-439, October.
    • Handle: RePEc:taf:jeduce:v:46:y:2015:i:4:p:430-439
    DOI: 10.1080/00220485.2015.1071219
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    References listed on IDEAS

    as
    1. Bradley J. Ruffle, 2003. "Competitive Equilibrium and Classroom Pit Markets," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(2), pages 123-137, January.
    2. Charles A. Holt, 1996. "Classroom Games: Trading in a Pit Market," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 193-203, Winter.
    3. Stephen L. Cheung, 2005. "A Classroom Entry and Exit Game of Supply with Price-Taking Firms," The Journal of Economic Education, Taylor & Francis Journals, vol. 36(4), pages 358-367, October.
    Full references (including those not matched with items on IDEAS)

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