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Efficiency in decentralized oligopolistic markets

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  • Nava, Francesco

Abstract

The paper analyzes quantity competition in economies in which a network describes the set of feasible trades. A model is presented in which the identity of buyers, of sellers, and of intermediaries is endogenously determined by the trade flows in the economy. The analysis first considers small economies, and provides sufficient conditions for equilibrium existence, a characterization of prices and flows, and some negative results relating welfare to network structure. The second and central part of the analysis considers behavior in large markets, and presents necessary and sufficient conditions on the network structure for equilibria to be approximately efficient when the number of players is large.

Suggested Citation

  • Nava, Francesco, 2015. "Efficiency in decentralized oligopolistic markets," Journal of Economic Theory, Elsevier, vol. 157(C), pages 315-348.
  • Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:315-348
    DOI: 10.1016/j.jet.2015.01.009
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    References listed on IDEAS

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    1. Daniele Condorelli & Andrea Galeotti & Ludovic Renou, 2017. "Bilateral Trading in Networks," Review of Economic Studies, Oxford University Press, vol. 84(1), pages 82-105.
    2. Polanski Arnold & Winter Eyal, 2010. "Endogenous Two-Sided Markets with Repeated Transactions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-27, March.
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    4. Kalai, Ehud & Postlewaite, Andrew & Roberts, John, 1978. "Barriers to trade and disadvantageous middlemen: Nonmonotonicity of the core," Journal of Economic Theory, Elsevier, vol. 19(1), pages 200-209, October.
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    More about this item

    Keywords

    Decentralized markets; Intermediation; Oligopoly; Efficiency; Market power;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D6 - Microeconomics - - Welfare Economics
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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