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Sustainability In A Multiproduct And Multiple Agent Contestable Market

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  • Vincent Iehlé

Abstract

We prove that a natural monopoly can set subsidy free pricing and sustainable pricing schedules in a general economic environment. The setting is a multiproduct and multiple agent contestable market where demands are elastic and where rivals can enter the submarkets composed by a set of the products line and a set of agents. Our results suggest that the existence results of the extant literature admit analogues even in an environment where rivals have enlarged possibilities to enter the market and where demands react to prices. The approach makes use of cooperative games to deduce the main results under conditions of fair sharing cost, a threshold in consumption and regularity of the profit function.

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  • Vincent Iehlé, 2009. "Sustainability In A Multiproduct And Multiple Agent Contestable Market," Bulletin of Economic Research, Wiley Blackwell, vol. 61(2), pages 151-164, April.
    • Handle: RePEc:bla:buecrs:v:61:y:2009:i:2:p:151-164
    DOI: 10.1111/j.1467-8586.2009.00308.x
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    1. Leonard J. Mirman & Yair Tauman & Israel Zang, 1985. "Supportability, Sustainability, and Subsidy-Free Prices," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 114-126, Spring.
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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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