International Trade Game

Today we will have a market in which one-half of the class are buyers in the home country and one-half of the class are buyers in the foreign country. You can buy one unit of the commodity during a trading period. The number on your playing card is the dollar value that you receive if you make a purchase. Your will be required to buy at a price that is no higher than the number on your card. Your earnings on the purchase are calculated as the difference between the number on the card and the purchase price. For example, if you have a 10 card and you purchase one unit at a price of $6, your earnings are $4. If you do not make a purchase, you do not earn anything in the period. Think of it this way: it's as if you knew someone who would later buy the unit from you at a price that equals your value number, so you can keep the difference if you are able to buy the unit at a price that is below the resale value.

• Trading Rules
• Trader Instructions
• Record Sheet

Source: Laury, Susan K., and Charles A. Holt, "Multimarket Equilibrium, Trade, and the Law of One Price," Southern Economic Journal, vol. 65, no. 3, January 1999, pp. 611-621.