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Strategic Pricing of Commodities

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Listed:
  • Kurt Jornsten
  • Jan Ubøe

Abstract

We consider a setting where a large number of agents are trading commodity bundles. Assuming that agents of the same type have a certain utility attached to each transaction, we construct a statistical equilibrium which in turn implies prices on the different commodities. Our basic question is then the following. Assuming that some commodities come out with prices that are socially unacceptable, is it possible to change these prices systematically if a new type of agent is paid to enter the market? We will consider explicit examples where this can be done.

Suggested Citation

  • Kurt Jornsten & Jan Ubøe, 2009. "Strategic Pricing of Commodities," Applied Mathematical Finance, Taylor & Francis Journals, vol. 16(5), pages 385-399.
    • Handle: RePEc:taf:apmtfi:v:16:y:2009:i:5:p:385-399
    DOI: 10.1080/13504860802639261
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    References listed on IDEAS

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    1. Jörnsten, Kurt & Ubøe, Jan, 2010. "Quantification of preferences in markets," Journal of Mathematical Economics, Elsevier, vol. 46(4), pages 453-466, July.
    2. Foley Duncan K., 1994. "A Statistical Equilibrium Theory of Markets," Journal of Economic Theory, Elsevier, vol. 62(2), pages 321-345, April.
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    More about this item

    Keywords

    Agent preferences; efficient markets; statistical equilibria; commodity prices; arbitrageurs;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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