I'm trying to understand how a continuous double auction works, by working through the below setup:
I'm trying to figure out
what the final results would look like
how to determine the equilibrium price and quantity of the experiment
I'd love some pointers on how to go about doing this.
I understand how the limit order book works. You queue up the bids and asks, and then find the closest pair where the ask price is less than the bid price.
So, the first pair of ask/bid prices to be executed are ($1.60, $2.40)? And the next would be ($1.70, $2.30) - and so on?
I'd love some pointer on how to find the equlibrium price.