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Understanding Average Deal Price in Bureaucratic Markets: Analyzing Demand and Supply

This analysis focuses on determining the average deal price (ADP) and price range in a bureaucratic market where participants have true information. By deriving demand and supply functions, we identify the equilibrium point where demand meets supply. In this case, the ADP is calculated to be approximately 78,186.23, with a price range of 76,000 to 80,000. It is noted that a total of 5 deals can be made, factoring in that 2 sellers and 2 buyers will be excluded from the market, highlighting the dynamics of trading in such environments.

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Understanding Average Deal Price in Bureaucratic Markets: Analyzing Demand and Supply

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  1. Market Experiments Part 1 Q1. In the case of bureaucrats with true information, What is the average deal price & price range, and how many deals can be made? UESUGI Takamasa

  2. Information

  3. How to Find Average Deal Price • Average deal price (ADP) is equal to the price where demand meets supply (Equilibrium point) To find ADP, • Derive demand & supply functions • Find the equilibrium point where those two functions intersect

  4. Demand-Supply Curve

  5. Linear Demand-Supply Curve P*=78.18623 Q*=5.222886

  6. Answer • Price Range (according to the graph) = 76,000~80,000 • Average deal price = 78,186.23 • 5 deals can be made = 2 sellers & 2 buyers are going to be excluded from the market

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