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Robustness of equilibrium price dispersion in finite market games

Author

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  • Régis Breton

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Bertrand Gobillard

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

We propose an approach to restricting the set of equilibria in a strategic market game and use it to assess the robustness of the price dispersion results obtained by Koutsougeras [2003, J. Econ. Theory 108, 169-175] in the multiple trading posts setup. More precisely, we perturb the initial game by the introduction of transaction costs and our main results are the following. (i) No equilibrium with price dispersion of the game with costless transactions can be approached by equilibria with positive transaction costs as costs get arbitrarily small. (ii) When this type of perturbation is considered the set of equilibrium outcomes is not a®ected by the number of trading posts.

Suggested Citation

  • Régis Breton & Bertrand Gobillard, 2006. "Robustness of equilibrium price dispersion in finite market games," Working Papers hal-04138854, HAL.
    • Handle: RePEc:hal:wpaper:hal-04138854
    Note: View the original document on HAL open archive server: https://hal.science/hal-04138854
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    References listed on IDEAS

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