Trade fragmentation and coordination in bilateral oligopolies
This paper studies a strategic market game where agents fragment their bids on different markets. Simple conditions for existence of an interior equilibrium point are provided. In equilibrium, all agents are active on the same markets and prices are identical across markets, so that all equilibria are equivalent to an equilibrium where all agents trade on a single market.
Stable Trading Structures in Bilateral Oligopolies
This paper analyses the formation of trading groups in a bilateral market with strategic traders. A trading structure (a partition of the set of traders into trading groups) is strongly stable if no coalition of traders can deviate and increase the utility of some of its members while making no other member worse off. It is weakly stable if no coalition of traders can deviate and make all its members strictly better off. The only strongly stable trading structure is the grand coalition, where all agents trade on the same market. Other weakly stable trading structures exist and are characterized by a strong ordering property: trading groups can be ranked by size and cannot contain very different numbers of traders of the two types. In the particular example where traders have log-linear utility functions, the set of weakly stable trading structures is completely characterized.
Competitive and Controlled Price Economies: The Arrow-Debreu Model Revisited
In an article entitled ‘A Social Equilibrium Existence Theorem’ by Gerard Debreu [2] and in a subsequent article entitled ‘Existence of an Equilibrium for a Competitive Economy’ by Kenneth Arrow and Gerard Debreu [1], the existence of a competitive equilibrium in a closed economy was examined in terms of the existence of a noncooperative equilibrium point in the sense of Nash [8] in a game related to the closed market model. The apparent motivation of the authors for the use of the noncooperative game model was the mathematical convenience provided by the existence proof for a noncooperative equilibrium point which in this instance could be shown to also be a ‘competitive equilibrium’ point in the economic model they constructed.