Market Games with Multiple Trading Posts
AbstractWe 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 InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1999-40.
Date of creation: 1999
Date of revision:
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Web page: http://center.uvt.nl
Trading posts; law of one price;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-07-28 (All new papers)
- NEP-GTH-1999-07-28 (Game Theory)
- NEP-MIC-1999-07-28 (Microeconomics)
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