Perfect Competition in an Oligoply (including Bilateral Monopoly)
AbstractWe 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.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse9_2008.
Date of creation: May 2008
Date of revision:
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Limit orders; double auction; Nash equilibria; Walras equilibria; mechanism design;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-07 (All new papers)
- NEP-BEC-2008-06-07 (Business Economics)
- NEP-COM-2008-06-07 (Industrial Competition)
- NEP-GTH-2008-06-07 (Game Theory)
- NEP-IND-2008-06-07 (Industrial Organization)
- NEP-MIC-2008-06-07 (Microeconomics)
- NEP-MST-2008-06-07 (Market Microstructure)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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