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Competitive Pricing In Socially Networked Economies

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Author Info

  • Allouch, Nizar

    (Department of Economics, University of Warwick)

  • Wooders, Myrna

    (Department of Economics, University of Warwick)

Abstract

In the context of a socially networked economy, this paper demonstrates an Edgeworth equivalence between the set of competitive allocations and the core. Each participant in the economy may have multiple links with other participants and the equilibrium network may be as large as the entire set of participants. A clique is a group of people who are all connected with each other. Large cliques, possibly as large as the entire population, are permitted ; this is important since we wish to include in our analysis large, world-wide organizations such as workers in multi-national firms and members of world-wide environmental organizations, for example, as well as small cliques, such as two person partnerships. A special case of our model is equivalent to a club economy where clubs may be large and individuals may belong to multiple clubs. The features of our model that cliques within a networked economy may be as large as the entire population and individuals may belong to multiple cliques thus allow us to extend the extant decentralisation literature on competitive pricing in economies with clubs and multiple memberships (where club sizes are uniformly bounded, independent of the size of the economy).

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp639.pdf
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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 639.

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Length: 21 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:wrk:warwec:639

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Web page: http://www2.warwick.ac.uk/fac/soc/economics/
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Related research

Keywords: social networks ; competitive pricing ; cliques ; clubs ; Edgeworth equivalence ; core;

References

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  1. Frank H. Page Jr. & Myrna H. Wooders & Samir Kamat, 2002. "Networks and Farsighted Stability," Computing in Economics and Finance 2002 370, Society for Computational Economics.
  2. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
  3. Broome, John, 1972. "Approximate equilibrium in economies with indivisible commodities," Journal of Economic Theory, Elsevier, vol. 5(2), pages 224-249, October.
  4. Wooders, Myrna Holtz, 1983. "The epsilon core of a large replica game," Journal of Mathematical Economics, Elsevier, vol. 11(3), pages 277-300, July.
  5. D. K. Foley, 1967. "Lindahl's Solution and the Core of an Economy with Public Goods," Working papers 3, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Harold L Cole & Edward C Prescott, 1997. "Valuation equilibrium with Clubs," Levine's Working Paper Archive 912, David K. Levine.
  7. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market: Large Finite Economies," Discussion Papers 99-05, University of Copenhagen. Department of Economics.
  8. Alexander Kovalenkov & Myrna H. Wooders, 1999. "An explicit bound on epsilon for nonemptiness of Epsilon-cores of games," Working Papers mwooders-00-03, University of Toronto, Department of Economics.
  9. Kovalenkov, Alexander & Wooders, Myrna Holtz, 1999. "Approximate Cores Of Games And Economies With Clubs," The Warwick Economics Research Paper Series (TWERPS) 535, University of Warwick, Department of Economics.
  10. Wooders, Myrna, 1978. "Equilibria, the core, and jurisdiction structures in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 18(2), pages 328-348, August.
  11. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
  12. Wooders, Myrna, 1980. "The Tiebout Hypothesis: Near Optimality in Local Public Good Economies," Econometrica, Econometric Society, vol. 48(6), pages 1467-85, September.
  13. Myrna Holtz Wooders, 1996. "Equivalence of Lindahl equilibrium with participation prices and the core (*)," Economic Theory, Springer, vol. 9(1), pages 115-127.
  14. Dutta, Bhaskar & Mutuswami, Suresh, 1997. "Stable Networks," Journal of Economic Theory, Elsevier, vol. 76(2), pages 322-344, October.
    • Dutta, Bhaskar & Mutuswami, Suresh, 1996. "Stable Networks," Working Papers 971, California Institute of Technology, Division of the Humanities and Social Sciences.
  15. Kovalenkov, Alexander & Wooders, Myrna Holtz, 2001. "Epsilon Cores of Games with Limited Side Payments: Nonemptiness and Equal Treatment," Games and Economic Behavior, Elsevier, vol. 36(2), pages 193-218, August.
  16. Conley, John P. & Wooders, Myrna H., 1997. "Equivalence of the Core and Competitive Equilibrium in a Tiebout Economy with Crowding Types," Journal of Urban Economics, Elsevier, vol. 41(3), pages 421-440, May.
  17. Kirman, Alan P & Oddou, Claude & Weber, Shlomo, 1986. "Stochastic Communication and Coalition Formation," Econometrica, Econometric Society, vol. 54(1), pages 129-38, January.
  18. Wooders, Myrna Holtz, 1994. "Equivalence of Games and Markets," Econometrica, Econometric Society, vol. 62(5), pages 1141-60, September.
  19. Hammond, Peter J. & Kaneko, Mamoru & Wooders, Myrna Holtz, 1989. "Continuum economies with finite coalitions: Core, equilibria, and widespread externalities," Journal of Economic Theory, Elsevier, vol. 49(1), pages 113-134, October.
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Cited by:
  1. Kovalenkov, Alexander & Wooders, Myrna, 2002. "Advances In The Theory Of Large Cooperative Games And Applications To Club Theory : The Side Payments Case," The Warwick Economics Research Paper Series (TWERPS) 641, University of Warwick, Department of Economics.

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