Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/zbw/bonedp/92008.html
   My bibliography  Save this paper

Perfect Competition in an Oligoply (including Bilateral Monopoly)

Author

Listed:
  • Dubey, Pradeep
  • Sondermann, Dieter
Abstract
We show that if limit orders are required to vary smoothly, then strategic (Nash) equilibria of the double auction mechanism yield competitive (Walras) allocations. It is not necessary to have competitors on any side of any market: smooth trading is a substitute for price wars. In particular, Nash equilibria are Walrasian even in a bilateral monopoly.

Suggested Citation

  • Dubey, Pradeep & Sondermann, Dieter, 2008. "Perfect Competition in an Oligoply (including Bilateral Monopoly)," Bonn Econ Discussion Papers 9/2008, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:92008
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/27170/1/587681683.PDF
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Peck, James & Shell, Karl & Spear, Stephen E., 1992. "The market game: existence and structure of equilibrium," Journal of Mathematical Economics, Elsevier, vol. 21(3), pages 271-299.
    2. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 23-38.
    3. Dubey, Pradeep, 1982. "Price-Quantity Strategic Market Games," Econometrica, Econometric Society, vol. 50(1), pages 111-126, January.
    4. L. Hurwicz, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 217-225.
    5. Gael Giraud & Hubert Stahn, 2013. "Nash-implementation of competitive equilibria via a bounded mechanism," Review of Economic Design, Springer;Society for Economic Design, vol. 17(1), pages 43-62, March.
    6. Sahi, Siddhartha & Yao, Shuntian, 1989. "The non-cooperative equilibria of a trading economy with complete markets and consistent prices," Journal of Mathematical Economics, Elsevier, vol. 18(4), pages 325-346, September.
    7. Sonia Weyers, 1999. "Uncertainty and insurance in strategic market games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(1), pages 181-201.
    8. Pradeep Dubey & John Geanakoplos & Martin Shubik, 2005. "Default and Punishment in General Equilibrium," Econometrica, Econometric Society, vol. 73(1), pages 1-37, January.
    9. Schmeidler, David, 1980. "Walrasian Analysis via Strategic Outcome Functions," Econometrica, Econometric Society, vol. 48(7), pages 1585-1593, November.
    10. Mas-Colell, Andreu, 1980. "Noncooperative approaches to the theory of perfect competition: Presentation," Journal of Economic Theory, Elsevier, vol. 22(2), pages 121-135, April.
    11. Bulow, Jeremy I, 1982. "Durable-Goods Monopolists," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 314-332, April.
    12. Mertens, J. F., 2003. "The limit-price mechanism," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 433-528, July.
    13. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    14. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-149, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dmitry Levando, 2012. "A Survey Of Strategic Market Games," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(194), pages 63-106, July - Se.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dubey, Pradeep & Sondermann, Dieter, 2003. "Perfect Competition in a Bilateral Monopoly," Bonn Econ Discussion Papers 26/2003, University of Bonn, Bonn Graduate School of Economics (BGSE).
    2. Pradeep Dubey & Dieter Sondermann, 2005. "Perfect Competition in a Bilateral Monopoly (In honor of Martin Shubik)," Cowles Foundation Discussion Papers 1534, Cowles Foundation for Research in Economics, Yale University.
    3. Gael Giraud & Hubert Stahn, 2013. "Nash-implementation of competitive equilibria via a bounded mechanism," Review of Economic Design, Springer;Society for Economic Design, vol. 17(1), pages 43-62, March.
    4. Giraud, Gael & Stahn, Hubert, 2003. "Efficiency and imperfect competition with incomplete markets," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 559-583, July.
    5. d'Aspremont, Claude & Dos Santos Ferreira, Rodolphe & Gerard-Varet, Louis-Andre, 1997. "General Equilibrium Concepts under Imperfect Competition: A Cournotian Approach," Journal of Economic Theory, Elsevier, vol. 73(1), pages 199-230, March.
    6. Yildiz, Muhamet, 2003. "Walrasian bargaining," Games and Economic Behavior, Elsevier, vol. 45(2), pages 465-487, November.
    7. Dubey, Pradeep & Geanakoplos, John, 2003. "From Nash to Walras via Shapley-Shubik," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 391-400, July.
    8. Dubey, Pradeep & Sahi, Siddhartha & Shubik, Martin, 2018. "Money as minimal complexity," Games and Economic Behavior, Elsevier, vol. 108(C), pages 432-451.
    9. Pradeep Dubey & Siddhartha Sahi & Martin Shubik, 2014. "Minimally complex exchange mechanisms: Emergence of prices, markets, and money," Department of Economics Working Papers 14-01, Stony Brook University, Department of Economics.
    10. Giraud, Gael, 2003. "Strategic market games: an introduction," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 355-375, July.
    11. Weyers, Sonia, 2004. "Convergence to competitive equilibria and elimination of no-trade (in a strategic market game with limit prices)," Journal of Mathematical Economics, Elsevier, vol. 40(8), pages 903-922, December.
    12. Dmitry Levando, 2012. "A Survey Of Strategic Market Games," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(194), pages 63-106, July - Se.
    13. Lombardi, Michele & Yoshihara, Naoki, 2013. "Natural implementation with partially honest agents in economic environments," MPRA Paper 48294, University Library of Munich, Germany.
    14. Serrano, Roberto & Volij, Oscar, 2000. "Walrasian Allocations without Price-Taking Behavior," Journal of Economic Theory, Elsevier, vol. 95(1), pages 79-106, November.
    15. Dutta, Bhaskar & Sen, Arunava, 2012. "Nash implementation with partially honest individuals," Games and Economic Behavior, Elsevier, vol. 74(1), pages 154-169.
    16. Weyers, Sonia, 2003. "A strategic market game with limit prices," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 529-558, July.
    17. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288 Elsevier.
    18. Liao, Mouhua, 2016. "A market game with symmetric limit orders," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 66-76.
    19. Tian, Guoqiang, 2009. "Implementation in economies with non-convex production technologies unknown to the designer," Games and Economic Behavior, Elsevier, vol. 66(1), pages 526-545, May.
    20. Olivier Bochet, 2007. "Implementation of the Walrasian correspondence: the boundary problem," International Journal of Game Theory, Springer;Game Theory Society, vol. 36(2), pages 301-316, October.

    More about this item

    Keywords

    Limit orders; double auction; Nash equilibria; Walras equilibria; mechanism design;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bonedp:92008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/gsbonde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.