Perfect competition in an oligopoly (including bilateral monopoly)

Pradeep Dubey; Dieter Sondermann

doi:10.1016/j.geb.2008.10.009

Perfect competition in an oligopoly (including bilateral monopoly)

Pradeep Dubey
, Dieter Sondermann

Economics

Stony Brook University

University of Bonn

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

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.

Original language	English
Pages (from-to)	124-141
Number of pages	18
Journal	Games and Economic Behavior
Volume	65
Issue number	1
DOIs	https://doi.org/10.1016/j.geb.2008.10.009
State	Published - Jan 2009

Keywords

Double auction
Limit orders
Mechanism design
Nash equilibria
Walras equilibria

Access to Document

10.1016/j.geb.2008.10.009

Cite this

@article{31688e3cce7d4757b2b774a882e449bd,

title = "Perfect competition in an oligopoly (including bilateral monopoly)",

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.",

keywords = "Double auction, Limit orders, Mechanism design, Nash equilibria, Walras equilibria",

author = "Pradeep Dubey and Dieter Sondermann",

year = "2009",

month = jan,

doi = "10.1016/j.geb.2008.10.009",

language = "English",

volume = "65",

pages = "124--141",

journal = "Games and Economic Behavior",

issn = "0899-8256",

publisher = "Academic Press Inc.",

number = "1",

}

TY - JOUR

T1 - Perfect competition in an oligopoly (including bilateral monopoly)

AU - Dubey, Pradeep

AU - Sondermann, Dieter

PY - 2009/1

Y1 - 2009/1

N2 - 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.

AB - 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.

KW - Double auction

KW - Limit orders

KW - Mechanism design

KW - Nash equilibria

KW - Walras equilibria

UR - https://www.scopus.com/pages/publications/58149466192

U2 - 10.1016/j.geb.2008.10.009

DO - 10.1016/j.geb.2008.10.009

M3 - Article

SN - 0899-8256

VL - 65

SP - 124

EP - 141

JO - Games and Economic Behavior

JF - Games and Economic Behavior

IS - 1

ER -

Perfect competition in an oligopoly (including bilateral monopoly)

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this