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Imperfect Competition and Fixprice Equilibria When Goods Are Gross Substitutes


  • Madden, Paul
  • Silvestre, Joaquim


It is possible, in principle, that the price-quantity pair generated by a model of imperfect competition may satisfy the conditions (voluntary trading and absence of frictions) for a fixprice equilibrium. It is shown that imperfect competitors will typically satisfy voluntary trading provided that appropriate gross substitute assumptions are satisfied. Hence, such assumptions are seen to ensure that the solutions of some well-known imperfectly competitive general equilibrium models are indeed fixprice equilibria, thus bringing together two important traditions in theoretical microeconomics. Copyright 1991 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Madden, Paul & Silvestre, Joaquim, 1991. " Imperfect Competition and Fixprice Equilibria When Goods Are Gross Substitutes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(4), pages 479-494.
  • Handle: RePEc:bla:scandj:v:93:y:1991:i:4:p:479-94

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    References listed on IDEAS

    1. Borge, Lars-Erik & Rattso, Jorn, 1995. "Demographic shift, relative costs and the allocation of local public consumption in Norway," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 705-726, December.
    2. Per-Anders Edin & Anders Forslund & Bertil Holmlund, 2000. "The Swedish Youth Labor Market in Boom and Depression," NBER Chapters,in: Youth Employment and Joblessness in Advanced Countries, pages 357-380 National Bureau of Economic Research, Inc.
    3. Charles F. Adams Jr. & Robert F. Cook & Arthur J. Maurice, 1983. "A Pooled Time-Series Analysis of the Job-Creation Impact of Public Service Employment Grants to Large Cities," Journal of Human Resources, University of Wisconsin Press, vol. 18(2), pages 283-294.
    4. Dahlberg, Matz & Forslund, Anders, 1999. "Direct Displacement Effects of Labour Market Programmes: The Case of Sweden," Working Paper Series 1999:22, Uppsala University, Department of Economics.
    5. Lars Calmfors & Anders Forslund & Maria Hemström, 2002. "Does Active Labour Market Policy Work? Lessons from the Swedish Experiences," CESifo Working Paper Series 675, CESifo Group Munich.
    6. Bergstrom, Pal & Dahlberg, Matz & Mork, Eva, 2004. "The effects of grants and wages on municipal labour demand," Labour Economics, Elsevier, vol. 11(3), pages 315-334, June.
    7. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    8. Calmfors, Lars & Skedinger, Per, 1995. "Does Active Labour-Market Policy Increase Employment? Theoretical Considerations and Some Empirical Evidence from Sweden," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 91-109, Spring.
    9. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    10. Ohlsson, Henry, 1992. "Job creation measures as activist fiscal policy -- an empirical analysis of policy reaction behavior," European Journal of Political Economy, Elsevier, vol. 8(2), pages 269-280, May.
    11. Holtz-Eakin, Douglas & Rosen, Harvey S, 1991. "Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 276-293, July.
    12. repec:hhs:iuiwop:432 is not listed on IDEAS
    13. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    14. Schmid, Gunther, 1979. "The Impact of Selective Employment Policy: The Case of a Wage-Cost Subsidy Scheme in Germany, 1974-75," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 339-358, June.
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    Cited by:

    1. Kaas, Leo & Madden, Paul, 1999. "Equilibrium Involuntary Unemployment under Oligempory," Economics Series 68, Institute for Advanced Studies.
    2. Paul Madden, 2008. "Price, quality and welfare consequences of alternative club objectives in a professional sport league," The School of Economics Discussion Paper Series 0802, Economics, The University of Manchester.

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