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Market Games with Multiple Trading Posts

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  • Koutsougeras, L.

    (Tilburg University, Center for Economic Research)

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    Abstract

    We study market games with multiple posts per commodity. We provide some facts that characterize prices of commodities across posts and show the following results: (i) As the number of agents increases, the price variability across posts for a commodity becomes smaller and it becomes zero when the number of agents becomes infinite, irrespectively of the distribution of characteristics in the economy. (ii) The set of equilibrium prices and allocations of a market game is a subset of the set of equilibria of another game with more trading posts per commodity. (iii) We demonstrate via an example that the inclusion can be strict, as there are equilibria with price disparities across posts for a commodity which cannot be captured with less trading posts. (iv) One can pass from an equilibrium of a market game into an equilibrium of a game with less trading posts per commodity, by consolidating posts where the price of a commodity is uniform.

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    Bibliographic Info

    Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1999-40.

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    Date of creation: 1999
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    Handle: RePEc:dgr:kubcen:199940

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    Web page: http://center.uvt.nl

    Related research

    Keywords: Trading posts; law of one price;

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    References

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    1. Postlewaite, A & Schmeidler, David, 1978. "Approximate Efficiency of Non-Walrasian Nash Equilibria," Econometrica, Econometric Society, vol. 46(1), pages 127-35, January.
    2. Sahi, Siddhartha & Yao, Shuntian, 1989. "The non-cooperative equilibria of a trading economy with complete markets and consistent prices," Journal of Mathematical Economics, Elsevier, vol. 18(4), pages 325-346, September.
    3. Peck, James & Shell, Karl & Spear, Stephen E., 1992. "The market game: existence and structure of equilibrium," Journal of Mathematical Economics, Elsevier, vol. 21(3), pages 271-299.
    4. KOUTSOUGERAS, Leonidas C., 1999. "A remark on the number of trading posts in strategic market games," CORE Discussion Papers 1999005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Koutsougeras, L.C., 1999. "A remark on the number of trading posts in strategic market games," Discussion Paper 1999-4, Tilburg University, Center for Economic Research.
    6. Martin Shubik, 1977. "A Theory of Money and Financial Institutions," Cowles Foundation Discussion Papers 462, Cowles Foundation for Research in Economics, Yale University.
    7. Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-68, October.
    8. repec:fth:louvco:9905 is not listed on IDEAS
    9. Koutsougeras, L., 1999. "A Remark on the Number of Trading Posts in Strategic Market Games," Discussion Paper 1999-04, Tilburg University, Center for Economic Research.
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