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Robustness of equilibrium price dispersion in finite market games

Author

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  • Régis Breton

    (LEO - Laboratoire d'économie d'Orleans [2008-2011] - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique)

Abstract
We propose an approach to restricting the set of equilibria in a strategic market game and use it to assess the robustness of the price dispersion results obtained by Koutsougeras [2003, J. Econ. Theory 108, 169-175] in the multiple trading posts setup. More precisely, we perturb the initial game by the introduction of transaction costs and our main results are the following. (i) No equilibrium with price dispersion of the game with costless transactions can be approached by equilibria with positive transaction costs as costs get arbitrarily small. (ii) When this type of perturbation is considered the set of equilibrium outcomes is not a®ected by the number of trading posts.
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Suggested Citation

  • Régis Breton, 2006. "Robustness of equilibrium price dispersion in finite market games," Post-Print halshs-00256842, HAL.
    • Handle: RePEc:hal:journl:halshs-00256842
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    More about this item

    Keywords

    Robustness; equilibrium; price; dispersion; finite; market; games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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