An exploration of the behaviour of resale markets through computer simulation

Abstract

A considerable proportion of marketing transaction activities in North America (and a considerably higher proportion in the other continents) takes place in secondary or resale markets. (Examples of these are the real estate markets, the used car markets, etc.) In spite of this, a survey of the published literature indicates that only limited academic attention has been paid to the behaviour of these markets. The research project described in this paper is a heuristic study of random imperfect markets utilizing computer simulation; the research design consists of 35 separate but correlated ex periments. The objective of the research is to investigate to what extent (if any) the average transaction prices and total transac tion volumes are affected by various degrees of price-information and/or bargaining strength on the one hand, and the shape of supply and demand schedules on the other. Tentative conclu sions are drawn based on the experimental results for these rela tionships, and readers are invited to pursue this investigation further (either analytically or heuristically) in order to develop a body of knowledge and understanding for the behaviour of these imperfect markets.