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Partial Equilibrium Analysis in a Market Game:the Strategic Marshallian Cross

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Author Info

  • Alex Dickson

    ()
    (Keele University, Department of Economics)

  • Roger Hartley

    ()
    (Keele University, Department of Economics)

Abstract

We show how non-price-taking behavior by agents in partial equilibrium can be analyzed using strategic versions of Marshallian supply and demand curves. There is a Nash equilibrium of a two-good, strategic market game at a given price if and only if the strategic supply and demand curves intersect at that price. This result allows us to prove new existence and uniqueness results for such games, which have previously been obtained only by imposing somewhat restrictive assumptions such as symmetry on each side of the market. It also enables us to show that many conventional comparative statics results of Marshallian analysis survive strategic play by buyers and sellers. Finally, we show that price manipulation in this game always has the effect of reducing supply and demand and that thick markets are almost competitive.

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Bibliographic Info

Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number KERP 2004/07.

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Length: 36 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:kee:kerpuk:2004/07

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Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
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Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom
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Keywords: Strategic Market Game; Imperfect Competition; Marshallian Cross;

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