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Durham University

Research & business

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Publication details for Prof Jason Shachat

Shachat, J. & Zhang, Z. (2017). The Hayek hypothesis and long run competitive equilibrium: an experimental investigation. Economic Journal 127(599): 199-228.

Author(s) from Durham


We report on an experiment investigating whether the Hayek Hypothesis (Smith, 1982) extends to the long run setting. We consider two environments; one with a production technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a constant long run average cost curve. We present alternative efficient production plans as a menu of fixed and marginal cost pairs. In both environments, we observe convergence to long run competitive equilibrium prices and quantities typically within six long run decision horizons.